Financial statements of Allied bank and annual reports
This study is conducted to examine performance of three banks named MCB,Askari bank and Allied bank. This study has done ratio analysis for the year 2010 to 2012 in order to see which bank has strong financial position over other two.
Basic Aim of Financial Statements Ratio Analysis
The basic aim of this research was to analyze the mentioned bank efficiency in managing their resources for generating profit and also composition of capital structure of mentioned banks how much of the bank assets are financed through internal debt. The outcomes of this analysis will be beneficial for the readers how ratio analysis can help the people to understand which company has better financial position and how shareholders and stakeholder may take benefits from this. The result of this study may help of both shareholder and stakeholder to take wise financial decision.
Secondary data like balance sheet and income statements were obtained from official banks websites. Then in order to conduct data analysis and ratio calculations Excel sheet was used. The study has done all the ratio and result has been displayed in tabulation for at data analysis portion. The study has found that MCB Net profit margin ratio has recorded high as compare to Askari bank and Allied bank. On the other hand, the gross spread ratio finding also tell us that here is again MCB is wining the position over other two banks. Gross spread ratio of MCB has found high as compare to other two banks. The result of non-interest income to total income also tells that non interest income to total income ratio of Allied bank has found high as compare to other two bank hence here is Allied bank is wining the position and in 2nd MCB ratio has recorded high as compare to Askari bank. For further detail , reader may consult the data analysis portion.
What is Ratio Analysis of Allied bank
Ratio analysis is used to measure and compare ratios of each firm with other similar firms in an industry. A benchmark is usually set to compare these individual firms in a given time period usually comprising of three to five years. Financial ratio analysis is performed for a variety of purposes like short term liquidity position, investments, making decisions about which part of business to continue or discontinue. Banks and other lending institutions examine the financial health of organizations before they lend them funds. Every business requires effective planning and management of its financial resources hence ratio analysis provides a useful tool which helps business especially banks manage their resources it is also one of the oldest and most widely trusted method of financial analysis. Liquidity ratios, profitability ratios, capital and leverage structure ratios and capital market ratios are few examples of ratios that are widely used. Banks make use of ratio analysis when conducting credit worthiness of a creditor.
In this study I have conducted ratio analysis of three banks operating in Pakistan namely allied bank, Askari bank, and Muslim Commercial Bank. I calculated and compared ratios of all three mentioned banks over past three years.
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