Final Project of Fin619

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RATIO compendium OFASKARI BANK, UNITED BANK AND BANK ALFALAH FOR THE YEARS 2009, 2010, 2011 A PROPOSAL FOR REPORT TO BE SUBMITTED TO THE DEPARTMENT OF charge SCIENCES, VIRTUAL UNIVERSITY OF PAKISTAN IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER IN BUSINESS ADMINISTRATION (MBA-Exec) Submitted By AAMIR SHAHZAD MC snow403644 MBA-Exec (Finance) SUBMISSION DATE 02-02-2013 Virtual University of Pakistan Letter of Un dertaking Job confirmation letter pic Dedication I would like to dedicate this project to My pargonnts My Wife & My Kids Ashar Ali & Mubashar Ali AcknowledgementAll my efforts for my MBA and this Project would have got been nonhing with out the help and floor of Almighty Allah and I am always Gratified to Blessings of Allah. More than anybody else, I would like to acknowledge my uncle Mr. Ashfaq Ali Tabassam for his neer ending support. He always guided me whenever I felt stuck off and his encouragement always worked as moral booster for me. I would like to extend my special thanks to my friend Mr. Aamir who advised me conviction to time and provided me technical assistance. I am extravagantlyly indebted to my boss in my organization Mr.Muzaffar Ali who spared me and gave me commodious time, out of my professional commitments, to go all out for my MBA from Virtual University of Pakistan. Executive Summary The purpose of this root titled RATIO ANALYSIS OF ASKARI BANK, UNITED BANK AND BANK ALFALAH FOR THE YEARS 2009, 2010, 2011is to investigate the financial transaction of these patoiss during the mentioned period. The first chapter of this report deals with introduction of project and cashboxs under study, financial period under friendliness, objectives and significance of the project. The aid part is about data processing and analysis.The fourth chapter is about calculation of different balances its similarity and interpretation. In last chapter conclusions and recommendations have been given. The data for the study is collected from financial repots of the hopes which are available on theirs single websites. The financial reports included the balance sheet, income statement and money issue statements. As regards to finding of study, the bring in service Margin symmetry of Askari and bank building Alfalah is low as compare to UBL. UBL is as thoroughly on top in gross send symmetry, amends on uprightness, debt dimension and proc ession/Deposit ratio. maculation Askari coast has better money commingle ratio and Price/Earning ratio. It is recommended for coast Alfalah and Askari bank to cut megabucks their non markup expenses to improve their illuminate pull in Margin proportionality while, on the different hand their turn over is satisfactory. UBL and Alfalah should decr hush their current liabilities and ensure the availableness of much liquidity to meet curt term debts. Askari bank and bank Alfalah some(prenominal) banks posit to espouse measures to cut down their post expenses in vagabond to growth their gross spread ratio.In order to enlarge non rice beer income Askari and Alfalah needs to increase their earnings through fees, commissions and opposite(a) advisory charges etc. In Advance/Deposit ratio Askari bank and Alfalah should have to utilize their deposits in more projects either through unified financing or general existence financing. Table of Contents Section I Chapter 18 1. 1 Introduction of the project 1. 2 avers Introduction 1. 4 Period Under Consideration 1. 5 Objectives 1. 6 substance Chapter 2. 11 2. 1 info Collection 2. 2 Data touch on and Analysis Chapter 3. 12 3. 1 mesh Profit Margin 3. 2 Operating cash flow ratio 3. 3 Gross Spread ratio 3. 4 Non- interest group income to total income ratio 3. 5 Spread ratio 3. 6 Advances/deposit ratio 3. 7 Return on total equity (ROE) 3. 8 Debt ratio 3. 9 Debt/ beauteousness ratio 3. 10 Price/Earning ratio Chapter 4. . 26 4. 1 Conclusions 4. 2 Recommendations Section I a) Student Introduction 29 b) Bibliography 30 Section IChapter 1 1. Project Introduction The financial ratio analysis techniques referred to in this aid could be useful to canvas any company financial performance. This study is likewise going to investigate the financial performance of trinity mentioned banks e. g. Askari bank, united bank and savings bank Alfalah. These banks are surveying in the Pakistani groc ery and are competitors all(prenominal) another(prenominal). accordingly this study is going to find out which bank has strong financial seat over other deuce banks. With the help of financial ratio analysis we can analyze the financial position of any company.Many stakeholders, investors, creditors whitethorn analyze any company, firms financial position with the help of ratio analysis ahead taking any important decision regarding to investment golds or any other. Therefore financial ratio is a mathematical correlation among several bods often stated in the form of percentage, measure, or days. 1. 2 Banks Introduction Askari Bank was incorporated in Pakistan on October 9, 1991, as a ordinary limited company. It commenced cognitive operation on April 1, 1992, and is principally engaged in the product line of banking, as defined in the Banking Companies Ordinance, 1962.The Bank is listed on Karachi, Lahore and Islamabad Stock Exchanges. Since inception, the bank has concen trated on growth through improving service quality, investment in technology and people, utilizing its extensive runner ne twork which includes Islamic and Agricultural banking. United Bank trammel (UBL) was incorporated in Pakistan on November 7th 1959. In 1963 the bank opened its first overseas branch in London, United Kingdom. In 1971 the UBL was nationalized by the Government. In 2002, the Government of Pakistan sold it in an open sell to a consortium of Abu Dhabi Group and Bestway.Currently UBL is one of the largest commercial banks in Pakistan having more than 1,220 online branches inside the country. Its 15 branches exterior the country are in the United States of America, Qatar, UAE, Bahrain, and Republic of Yemen. It also has representative offices in Tehran (Iran), and Almaty (Kazakhstan). It owns subsidiaries in the UK (United National Bank extra), and in Zurich (Switzerland). Bank Alfalah special was incorporated on June 21st, 1992 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from 1st Nov, 1997.The Bank is currently operating through various branches in Pakistan, Bahrain, Bangladesh & Afghanistan, with the registered office at B. A. Building, I. I. Chundrigar, Karachi. Streng then(prenominal)ed with the banking of the Abu Dhabi Group and driven by the strategic goals case-hardened out by its board of management, the Bank has invested in revolutionary technology to have an extensive hold of products and services. During the past five categorys, Bank Alfalah has emerged as one of the foremost financial institution in the function endeavoring to meet the needs of tomorrow today. 3. Financial Period Under-Consideration for AnalysisFinancial period under consideration for analysis (2009, 2010, 2011) 4. Objectives 1. To analyze the selected banks efficiency in managing their resource for generating shekels 2. To composition of enceinte structure of the selected banks, how a lot of the banks assets are financed through external and internal debt. 3. To find out that how effectively selected banks are maximizing their profit by exacting their interest expenses. 4. To compare the selected banks interest income with their interest expenses. 5. Are banks able to pay the current liabilities from their cash equivalents? . importation The significance of these projects whitethorn include the following 1. The finding of this enquiry will be more beneficial for investors, creditors, to take good decision after seeing the guide of ratio. They can easily analyze the bank position through this study result. Bank Management may also study the finding of this study to determine the success or failure of particular sales, market as well as financing strategies. 2. At the end of this research, we will be able to lay down which bank is more able to pay its current liabilities from their cash equivalents. 3.The major outcomes of this research, this study will pass away the concept regarding to financial ratio analysis in banking sector by applying different ratios. 4. This research may help the stakeholders to analyze financial ratios result before taking any serious decisions. 5. Financial mangers of selected banks also take advantages from this study to identify their bank strengths and weakness and will improve their poor areas. Chapter 2) Data treat & Analysis 1. Data Collection Sources Study has used three banks annual reports/balance sheet, income statements, cash flow statements for data analysis and data processing.In research only secondary would be used to access the objectives which are mentioned as supra. The study has used secondary sources to access the objectives of this research. The sources of this research were three banks websites. Annual reports were collected from the websites 2. Data Processing and Analysis Tools Data was processed, analyzed and all the entry has done on excel sheet. Hence Study has used Excel sheet for data analysis a nd for calculation purpose. Result has been displayed on MS world in tabulation form with interpretation. Chapter 3) Data Analysis ratio Analysis 1 Net Profit Margin SignificanceNet profit margin ratio explicit the profitability of the institution against the revenue. It will also define the performance of the company in its operations in the market. So, shareholders assess it carefully in order to take their economic decisions. law Net profit margin= (Net profit/ Revenue) * coulomb Banks 2009 2010 2011 UBL 9,192,687/61,107,025* snow 11,159,930/59,331,761* hundred 15,499,663/70,450,475*100 15. 4% 18. 81% 22. 00% Askari Bank 1,097,507/22,586,736*100 943,177/27,952,162*100 1,627,698/32,766,351*100 4. 86% 3. 37% 4. 97% Bank Alfalah 897035/35561312 *100= 968452/37530256*100= 3503130/44298178*100= 2. 2% 2. 58% 7. 91% Banks 2009 2010 2011 UBL 15. 04 18. 81 22. 00 Askari Bank 4. 86 3. 37 4. 97 Bank Alfalah 2. 2 2. 58 7. 91 pic edition and analogy The analysis of above tab le and graph depicts that the Net Profit Margin of all the Three banks is change magnitude. UBL is on the top with 15. 04% earning in the period of 2009 and increasing in the respective(prenominal) grades with 18. 81% in the year 2010 and 22% in 2011 which instals a positive trend which is overdue to the stringent control on operating expenses . While on the side, Askari bank Profit margin shows minor fluctuation with 4. 6% in the period 2009 then decreases in 2010 to 3. 37% owing to increase in non markup expenses and increases to 4. 49% in the year 2011. Profit margin of Bank Alfalah is also showing positive ness which is 2. 52% in 2009 and 2. 58% in the year 2010 and unhinged up to 7. 91% in 2011. 2 Operating funds Flow Ratio Significance The ratio explains the cash flows of the bank or company which it earns by its operations and analyze it against it current liabilities to determine how well a company is in paying its debts which fall due in the financial year.FORMULA Ope ration gold Flow Ratio= Net cash generated from operating activities/ Current Liabilities Banks 2009 2010 2011 UBL 23,099,432/262214540= 100,070,348/369628811= 108,571,682/407621100= 0. 09 propagation 0. 27 clock 0. 7 time Askari Bank 36,245,071/49327164= 35,810,016/114583064= 36,491,839/14943963= 0. 73 Times 0. 31 multiplication 2. 44 quantify Bank Alfalah 19945927/350833577= 18112043/184831395= 54274913/194917015= 0. 06 times 0. 0 time 0. 28 time Banks 2009 2010 2011 UBL 0. 09 0. 27 0. 27 Askari Bank 0. 73 0. 31 2. 44 Bank Alfalah 0. 06 0. 0 0. 28 pic operative Current Liabilities of UBL 2009 2010 2011 Bills payable (Short term) 5,147,259 5,045,815 5,879,043 Borrowings (Short term) 35,018,765 44,187,313 45,534,286 Deposits and other accounts (Short term) 209,685,205 319,797,360 340,999,875 Liabilities against assets subject to finance read (Short term). Other liabilities (Short term) 12,363,311 369,628,811 407,621,100 wide 262,214,540 369628811 407, 621,100 Working Current Liabilities of Askari Bank 009 2010 2011 Bills payable (Short term) 2,945,6703,089,9842,756,032 Borrowings (Short term) 19,300,16325,554,7772,758,043 Deposits and other accounts (Short term) 22,247,84228,646,7715,516,086 Liabilities against assets subject to finance ease (Short term). Other liabilities (Short term) 4,833,48957,291,5323,913,802 Total 49,327,16411458306414,943,963 Working Current Liabilities of Bank Alfalah 2009 2010 2011 Bills payable (Short term) 3,766,144 4,521,533 5,403,453 Borrowings (Short term) 20,107,541 13,050,006 17,060,524 Deposits and other accounts (Short term) 320,249,261 161,368,880 165,257,870 Liabilities against assets subject to finance submit (Short term). 4,429 3,031 Other liabilities (Short term) 6,706,202 5,887,945 7,195,168 Total 350,833,577184,831,395194,917,015 commentary and comparison The analysis of the above table and graph show that Operating Cash Flow of UBL is 0. 09 times in the period 2009 and 0. 27 times in the periods 2010 and 2011 shows consistency in respective years. While the cash flow of Askari bank is 0. 73 times in 2009 and decreases to 0. 31 times due to winnow out in cash generated from operating activities and increases to 2. 44 times in the year 2011 due to the decline in short term liabilities and increase in cash generation. Cash flow of Bank Alfalah is 0. 6times in the year 2009 and 0. 10 times in 2010 and 0. 28 times in the period 2011 shows increasing trend. 3 Gross Spread Ratio Significance It is being calculated by dividing the difference of interest realise and expensed by interest expensed on the deposits of the public. It will help to measure the markup income of the bank in the reporting period. FORMULA Gross Spread Ratio = (Mark-up / return / interest realise Mark-up / return / interest expensed) / Mark-up / return / interest earned*100 Banks 2009 2010 2011 UBL 61,107,025- 28,163,787= 59,331,761- 24,997,188= 70,450,475 -31,025,869= 32,943,2 38/61,107,025= 34,334,573/59,331,761= 39,424,606/70,450,475= 53. 1% 57. 87% 55. 96% Askari Bank 22,586,736 13,554,078 = 27,952,162 17,936,616= 32,766,351- 22,699,583= 9,032,658/22,586,736 = 10,015,546/27,952,162= 10,066,768/32,766,351 = 30. 72 % 39. 99% 35. 3 % Bank Alfalah 35561312 24654180 =10907132/35561312 =37530256 23855448= 44298178 25687485= 30. 67% 13674808/37530256 = 18610693/44298178 = 36. 44% 42. 01% Banks 2009 2010 2011 UBL 53. 91 57. 87 55. 96 Askari Bank 39. 99 35. 83 30. 72 Bank Alfalah 30. 67 36. 44 42. 1 pic Interpretation and comparison The analysis of the above table and graphical histrionics shows the Gross Spread Ratio of UBL 53. 91% in the period 2009 and increases to 57. 87% in the period 2010 and then decreases to 55. 96% in 2011 severally, UBL is on the top in interest earning in the market. Askari bank ratio is 39. 99% in the period 2009, 35. 83% and 30. 72% in the periods 2010 and 2011. While Bank Alfalah ratio is increasing from 20 09 to 2011 with 30. 67%, 36. 44% and 42. 01% which is better marginally then other banks. moreover UBL is earning more as compare to other two banks due to better policy making and service. 4 Non-Interest Income to Total Income Ratio Significance It is other income which a bank earn from its services related to non markup sources such as advisory services and consultation provided in risk management etc. It describes the percentage of non interest income to total income of the bank or company. FORMULA Non Mark-up / interest income to total income ratio= non mark-up / interest income / (non mark-up / interest income +Mark-up / return / interest earned)*100 Banks 2009 2010 2011 UBL 11,419,571/72526596= 10,090,162/69421923= 12,718,253/83168728= 15. 75% 14. 53% 15. 29% Askari Bank 2,544,415/25131151= 2,800,297/30752459= 2,902,921/35669272= 10. 2% 9. 11% 8. 14% Bank Alfalah 5182253/40743565 = 4708161/42238417= 5367713/49665891 = 12. 72 % 11. 15% 10. 81% Banks 2009 2010 2011 UB L 15. 5 14. 53 15. 29 Askari Bank 10. 12 9. 11 8. 14 Bank Alfalah 12. 72 11. 15 10. 81 pic Interpretation and comparison The analysis of the above table and graph shows the Non Interest income of all the three banks with the highest ratio of UBL which is 15. 75% in the period 2009 and 14. 3% in the period 2010 and in 2011 is 15. 29% in comparison with Askari bank and Bank Alfalah. Askari Bank earn 10. 12% in the period 2009 and 9. 11% and 8. 14% in 2010 and 2011 which is declining. While Bank Alfalah ratios are 12. 72%, 11. 15% and 10. 81% in the years 2009, 2010 and 2011 is declining severally. So, UBL shows better ratio as compare to the other banks in all the three years. The Results shows that UBL shows fluctuation while the other banks ratios show declining trend. Working of Total income of UBL Total Income= (Non mark-up / interest income +Mark-up / return / interest earned) Total Income Non Mark-up/interest income 11,419,571 10,090,162 12,718,253 Mark-up/return/inter est earned 61,107,025 59,331,761 70,450,475 Total Income = 72526596 69421923 83168728 Working of Total income of Askari Bank Total Income Non Mark-up/interest income 2,544,415 2,800,297 2,902,921 Mark-up/return/interest earned 22,586,736 27,952,162 32,766,351 Total Income 25131151 30752459 35669272 Working of Total Income of Bank Alfalah Total Income= (Non mark-up / interest income +Mark-up / return / interest earned) Total Income Non Mark-up/interest income 5182253 4708161 5367713 Mark-up/return/interest earned 35561312 37530256 44298178 Total Income 40743565 42238417 49665891 Interpretation and comparison Interpretation is missing. 5 Spread Ratio Significance It is the ratio that describes the markup spread between income and expense. It helps to measure how much income bank earns by incurring markup cost.Higher ratio shows more profitability through loans and investments. Formula- Spread Ratio = Interest Earned / Interest Expensed Banks 2009 2010 2011 UBL 61,107, 025/28,163,787= 59,331,761/24,997,188= 70,450,475/31,025,869= 2. 17 times 2. 37 times 2. 7 times Askari Bank 22,586,736/13,554,078= 27,952,162/17,936,616= 32,766,351/22,699,583= 1. 68 times 1. 56 times 1. 44 times Bank Alfalah 35561312/24654180 = 37530256/23855448= 44298178/25687485= 1. 44 times 1. 7 times 1. 72 times Banks 2009 2010 2011 UBL 2. 17 2. 37 2. 27 Askari Bank 1. 67 1. 56 1. 44 Bank Alfalah 1. 44 1. 7 1. 72 pic Interpretation and comparison The analysis of the above table and graph shows the Spread Ratio of the UBL which is highest as compare to the other two banks, is at 2. 17 times in the year 2009 and increases to 2. 37 times in the year 2010 and 2. 27 times in the year 2011, decreases the zig zag trend is due to the fluctuation in both aspects interest earn and expensed. While the ratio of Askari bank 1. 67% in the year 2009, 1. 56% in the year 2010 and 1. 4% in the year 2011 respectively. Bank Alfalah ratio shows increasing trend end-to-end the three y ears 2009 to 2011 which are as 1. 44%, 1. 57%, 1. 72% which shows better recovery of interest income from its investments 6 Advances / Deposits Ratio Significance It defines the advances banks make from the available deposits. It measures the ability of the bank in fruitful usance of money of the depositors which will increase the markup income. FORMULA Advances / Deposits Ratio= Total Advances/ Total Deposits Banks 2009 2010 2011 UBL 354,091,713/492,036,103= 333,732,172/550,645,767= 325,347,208/612,980,139= 0. 72 times 0. 61 times 0. 53 times Askari Bank 135,034,499/205,970,227= 152,784,137/255,936,503= 150,710,709/291,502,993= 0. 6 times 0. 60 times 0. 52 times Bank Alfalah 188042438/324759752= 207152546/354015311= 198468512/401247886= 0. 58 times 0. 59 times 0. 49 times Banks 2009 2010 2011 UBL 0. 2 0. 61 0. 53 Askari Bank 0. 66 0. 60 0. 52 Bank Alfalah 0. 58 0. 59 0. 49 pic Interpretation and comparison The analysis of the above table and graph shows Advance/Depos it ratio of UBL which is very high as compare to other banks 0. 2 times in the year 2009 and 0. 61 times in the year 2010 and 0. 53 in the year 2011. Askari bank ratio is 0. 66 times, 0. 60 times and 0. 52 times in the consecutive years 2009, 2010 and 2011. While the ratio of bank Alfalah is 0. 58 times in 2009 and increases to 0. 59 times 2010 and decline drastically to 0. 49 times in 2011with 0. 10 times which shows that Bank Alfalah is not utilizing its deposits effectively as compare to other banks. 7 Return on Total Equity (ROE) Significance It measures income bank earns from the equity.It determines the ability of the institution how productively it uses the money of shareholders in its business. High ratio will allurement more investors. FORMULA Return on total Equity=Net Income/ Total equity*100 Banks 2009 2010 2011 UBL 9,192,687/52276246*100= 11,159,930/60180924*100= 15,499,663/70,622,933*100= 17. 58 % 18. 4 % 21. 94% Askari Bank 1097507/ 13142688 943177/ 14820578*100= 1627698/ 16508782*100= *100= 8. 35 % 6. 36 % 9. 86 % Bank Alfalah 897035/ 19770260 *100= 968452/ 19726556*100= 3503130/ 22839886*100= 4. 4 % 4. 91 % 15. 34 % Banks 2009 2010 2011 UBL 17. 58 18. 54 25. 76 Askari Bank 8. 35 6. 36 9. 86 Bank Alfalah 4. 4 4. 91 15. 34 pic Working of Total Equity UBL (UBL) Working Total equity Total Equity 2009 2010 2011 apportion capital 11,128,907 12,241,798 12,241,798 reserves 18,959,537 21,688,637 Un appropriated profit 22,187,802 26,250,489 Total Equity 52276246 60180924 Working of Total Equity (Askari bank) 2009 2010 2011 Share capital 5,073,467 6,427,440 7,070,184 Reserves 7,235,710 7,691,319 8,136,440 Un appropriated profit 833,511 701,819 1,302,158 Total Equity 13,142,688 14,820,578 16,508,782 Working of Total Equity (Bank Alfalah) 2009 2010 2011 Share capital 13491563 13491563 13491563 Reserves 3587969 3819133 4100264 Un appropriated profit 2690728 2415860 5248059 Total Equity 19770260 19726556 22839886 Interpretation and comparison The analysis of the above table and graph show the Return On equity of all the three banks. UBL ratio is 17. 58% in the year 2009, 18. 54% in the year 2010 and 25. 76% in the year 2011. While Askari bank ratio is 8. 35% in 2009, 6. 36% in the period 2010 and 9. 86% in 2011 respectively. Bank Alfalah ratios are 4. 54%, 4. 91% and 15. 34% in the periods 2009, 2010 and 2011.So on marginal basis Alfalah improves utilization of equity then other two banks. But on the whole, UBL is on the top in optimum utilization of stakeholders equity. 8 Debt Ratio Significance It measures the liabilities of the bank or company against the total assets. It should be low as investors like low ratio because the need their residual interest to be secured. FORMULA Debt ratio= (Total debt/ Total assets)*100 Banks 2009 2010 2011 UBL 558,779,710/619,718,433*100= 631,402,822/699,817,887*100= 698,906,833/778,059,741*100= 90. 7% 90. 22 % 89. 83 % Askari Bank 239,378, 374/254,327,446*100= 298,740,410/314,744,552*100= 325,980,040/343,756,306*100= 94. 12 % 94. 92% 94. 83% Bank Alfalah 366936635/389070055*100= 389178295/411483839*100= 442396764/468173802*100= 94. 31% 94. 58 % 94. 49 % Banks 2009 2010 2011 UBL 90. 17 90. 22 89. 83 Askari Bank 94. 12 94. 92 94. 83 Bank Alfalah 94. 31 94. 58 94. 49 pic Interpretation and comparison The analysis of the above table and graph show the Debt Ratio, UBL ratio is 90. 17 in the year 2009, 81. 15% in the year 2010 and 99. 7% in the year 2011. Askari bank ratio is 94. 12% in 2009, 94. 12% in 2010 and 94. 83% in 2011 which show consistency in the three years. Bank Alfalah shows also ordered trend in 2009, 2010 and 2011 are 94. 31%, 94. 58% and 94. 49%. So results show that UBL ratio is increasing which is not good indication as compare to other banks, while other banks are controlling effectively their Debt ratio. 9 Debt / Equity Ratio Significance It is the percentage of liabilities to shareholders mo ney. It will define either the bank is equity or liability based. It also helps to assess the how risky the company is. FORMULA Debt / Equity Ratio = (total debt/ total equity) Banks 2009 2010 2011 UBL 558,779,710/52276246= 631,402,822/60180924= 698,906,833/70,622,933= 10. 69 times 10. 49 times 9. 90 times Askari Bank 239,378,374/13142688= 298,740,410/14820578= 325,980,040/16508782= 18. 21 times 20. 16 times 19. 75 times Bank Alfalah 366936635/19770260 = 18. 56 times 389178295/19726556= 19. 73 times 442396764/22839886= 19. 37 times Banks 2009 2010 2011 UBL 10. 69 10. 49 11. 61 Askari Bank 18. 21 20. 16 19. 75 Bank Alfalah 18. 56 19. 73 19. 37 pic Interpretation and comparison The analysis of the above table and graph shows the Debt/Equity ratio where UBL ratio is 10. 69% in 2009,10. 49% in the year 2010 and 11. 1% in the year 2011 respectively which remains consistent in first two years then increases in 2011. Askari bank ratio is 18. 21% in 2009 which too high as comp are to UBL, 20. 16% in 2010 and 19. 75% in the year 2011. While Bank Alfalah is on the same level 18. 56% in 2009, 19. 73% and 19. 37% in the years 2010 and 2011. As as consequence of analysis, UBL ratio is much better then other banks as its ratio is approximately 8% below the other banks ratio. 10 Price/Earnings Ratio Significance It will define the price of share against the per share earning. It should be high as it shows business prosperity and growth chances are bright in future. FORMULA P/E = Current Market Share Price/ EPS Working of EPS EPS WORKING UBL 2009 2010 2011 Net Income= 9,192,687 Net Income= 11,159,930 Net Income= 15,499,663 soma of shares= 1,112,890 weigh of shares= 1,224,179 Number of shares= 1,224,179 = Net income/ outstanding number of shares = Net income/ outstanding number of shares =9,192,687 / 1,112,890 = 11,159,930/1,224,179 = Net income/ outstanding number of shares = 8. 26 per share = 9. 12 per share = 15,499,663/1,224,179 = 12. 66 per shar e No of outstanding share figure has been taken from the notes i. e Share capital EPS WORKING ASKARI BANK 2009 2010 2011 Net Income= 1,097,507 Net Income=943,177 Net Income= 1,627,698 Number of shares= 642,743 Number of shares= 707,018 Number of shares= 507,346 = Net income/ outstanding number of shares = 943,177/642,743 = Net income/ outstanding number of shares = Net income/ outstanding number of shares = 1. 47 per share = 1,627,698/707,018 = 1,097,507/507,346 = 2. 30 per share = 2. 16 per share BANK Alfalah 2009 2010 2011 Net Income= 897,035 Net Income= 968,452 Net Income= 3,503,130 Number of shares= 134,9156 Number of shares= 134,9156 Number of shares= 134,9156 = Net income/ outstanding number of shares = Net income/ outstanding number of shares = Net income/ outstanding number of shares = 897,035/ 134,9156 = 968,452/ 134,9156 = 3,503,130/ 134,9156 = 0. 66 per share = 0. 71 per share = 2. 59 per share 0. 66 0. 71 2. 59 Banks 2009 2010 2011 UBL 64. 25/8. 26= 7. 77 times 84. 23/9. 12= 9. 23 times 84. 17/12. 66= 6. 64 times Askari Bank 45. 25/2. 16 = 20. 92 times 64. 75/1. 47 = 44. 12 times 73. 49/2. 30 = 31. 92 times Bank Alfalah 77. 45/0. 66 = 116. 48 times 114. 23/0. 72= 159. 13 times 16. 87/2. 60= 6. 69 times Banks 2009 2010 2011 UBL 7. 77 9. 3 6. 64 Askari Bank 20. 92 44. 12 31. 92 Bank Alfalah 116. 48 159. 13 6. 69 pic Interpretation and comparison The analysis of the above table and graph shows the Price Earning ratios, UBL ratio is 7. 77 times in the year 2009, 9. 23 times in 2010 and 6. 64 times in the year 2011is respectively declining. While Askari bank ratio 20. 92 times in 2009, 44. 12 times in 2010 and increases to 31. 2, on the other hand you can see the P/E of bank Alfalah in year 2009,2010, 2011 is 116. 48 in year 2009, 159. 13 year 2010 and 6. 69 in year 2011. After the result it has prove that Bank Alfalah P/E is higher and better in year 2009 and year 2010 than other two banks. Askari bank and UB L shows declining trend which is unfavorable for the investors. Chapter 4) Conclusion and Recommendations 4. 1) Conclusion Following findings has been inferred on the basis of above ratio analyses which are as 1. Net profit margin ratio of UBL is high as compare to Askari and Alfalah. In addition to that, Bank Alfalah captures the second level in the comparison.So, UBL has taken over the major share of profit margin 2. Analysis of Operating Cash Flow ratio shows Askari bank ratio is high as compare to UBL and Alfalah. 3. On the basis of ratio analysis UBL gross spread ratio is good and high as compare to Askari and bank Alfalah in the current year. While Bank Alfalah is ranked second in the comparison. 4. In accordance with the analysis of non-interest income to total income ratio UBL ratio is high as compare to the other two banks. While analysis show Askari bank ratio is lowest than UBL and bank Alfalah. 5. The analysis has shown UBL spread ratio is high and much better than other banks in comparison. 6.On the basis of advance/Deposit ratio analysis UBL ratio is high as compare to Askari and Alfalah in the current year. 7. The analysis of Return on equity ratio shows that UBL return is high and better than the other two banks. 8. Debt ratio Analysis shows that UBL ratio is high than other two banks. While Askari and Alfalah are at the same level. 9. According to the analysis of Debt/Equity ratio Askari bank ratio is high and bank Alfalah is on the second position. 10. The Price/Earning ratio of Askari bank is high in the analysis of the three banks. While UBL is on the second and bank Alfalah is on the trine rank. 4. 2) Recommendations 1. The Net profit Margin ratio of Askari and bank Alfalah is low.In order to improve their net profit both the banks should have to cut down their non markup expenses while, on the other hand their turnover is satisfactory. 2. The Operating cash flow of UBL and Alfalah should have to be improved. These banks should decrease t heir current liabilities and ensure the availability of more liquidity to meet short term debts. 3. Askari bank and bank Alfalah both banks need to adopt measures to cut down their interest expenses in order to increase their gross spread ratio. 4. In order to increase non interest income Askari and Alfalah needs to increase their earnings through fees, commissions and other advisory charges etc. 5.In Advance/Deposit ratio Askari bank and Alfalah should have to utilize their deposits in more projects either through corporate financing or general public financing. 6. 6. Return on total equity of Askari bank is low, it should increase its net income by cut down its expenses with significant margin. 7. Debt ratio of UBL is high so it should have to avoid more borrowings and use available funds in more proper ways. 8. Spread ratio of Askari bank is low as compare to other banks it should have to increase its lending and use deposits in effective ways. SECTION II a) Introduction of the schoolchild Last Degree Obtained Bachelor of Commerce Current Organization Dubai City Flowers LLC, Dubai, UAECurrent Designation Administration bowl Experience 10+ years b) BIBLOGRAPHY Askari bank limited Pakistan. (2009). annual-reports. Retrieved December 6, 2012, from Askari bank Limited appointed websitehttp//www. askaribank. com. pk/Reports/Askari%20Financials%202009. pdf Askari bank limited Pakistan. (2010). annual-reports. Retrieved December 6, 2012, from Askari bank Limited Official websitehttp//www. askaribank. com. pk/Reports/Askari%20AR2010%20(Final%20Version). pdf Askari bank limited Pakistan. (2011). annual-reports. Retrieved December 6, 2012, from Askari bank Limited Official website http//www. askaribank. com. k/Reports/Askari%20AR%202011%20ALL. pdf United bank limited . (2009). Financial-reports. Retrieved December 6, 2012, from United bank Limited Official website https//www. ubldirect. com/corporate/resources/ubl/aboutus/financial_report/report_2009/annual_dec0 9/UBLAnnualReport2009. pdf. United bank limited . (2010). Financial-reports. Retrieved December 6, 2012, from United bank Limited Official website https//www. ubldirect. com/corporate/resources/ubl/aboutus/financial_report/report_2010/annual_dec10/UBLAnnualReport2010. pdf United bank limited . (2011). Financial-reports. Retrieved December 6, 2012, from United bank Limited Official website https//www. ubldirect. om/corporate/resources/ubl/aboutus/financial_report/report_2011/Annual_Reports/UBL%20Annual%20Report%202011. pdf Bank Alfalah Limited. (2009). Financial-reports. Retrieved December 6, 2012, from Bank Alfalah Limited Official website http//www. bankalfalah. com/about/ transfer/AnnualReport2009. pdf Bank Alfalah Limited. (2010). Financial-reports. Retrieved December 6, 2012, from Bank Alfalah Limited Official website http//www. bankalfalah. com/about/download/BALAnnualReport2010. pdf Bank Alfalah Limited. (2011). Financial-reports. Retrieved December 6, 2012, from Bank Alfalah Limited Official website http//www. bankalfalah. com/about/download/BALAnnualReport2011. pdf