This study emphasizes comparing ratio analysis of three financial concerns through evaluating their financials. Ratio analysis is a vital tool for for investors, lenders and other financial institutions to develop an understanding of profitability and financial position of an organization. Even though Ratio analyses is always criticized for meagerness of its results due to doubtful financial figures reported in financial statements (financial redressing) and not considering several intangible, non-financial aspects, but still it is of huge importance for almost all stakeholders of an organization. It has been advised that Bank Alfalah and NBP could cut-off unneeded expenses so as to extend the profits, re-assess assets and will place controls over retention of reserves, un-appropriated profits and surplus on reassessment of assets to beat the case. Bank Alfalah can also use the similar ways to override the problems. NBP’s performance remained satisfactory.
Analysis shows different findings of three banks, as you can see that UBL have had highest profits in revenues the values of UBL continued to increase. Bank Alfalah profits increased later after it started with lowest profit margin values. Bank Alfalah is in second place. And NBP had lowest net profit margin ratios. In other ratio, NBP and Bank Alfalah the values show that NBP had the highest cash flow in all three years provided. UBL had fluctuating values and a rise and fall trend was seen.
Financial institutions and other corporate organizations are curious about how their corporation is doing when compared with overall market. Economists’ wants to know which companies are financially stable and which are not as stable as they report to be. For such measures and accurate financial data Ratio analysis are conducted. They give us a clear indication of how an organization is performing in terms of financial performance. Ratio analysis is divided into several other ratios and formulae like Debt, management ratios, market value ratios, profitability analysis ratios, asset management ratios and short term solvency ratios.
All the mentioned ratios provide tools for accurate calculation of organizations financial resources, it also indicates how a corporation makes use of these resources and acquires profit. Apart from making a profit another factor to consider is how an organization is able to pay its debts as well. Debt management ratios indicates how an organization is able to pay its debts while making a profit. Studying of ratio analysis in details provide clear view of any organization’s financial climate.
The three banks selected for this study are Bank Alfalah, UBL and National Bank of Pakistan. The study will show financial position of each bank, it will indicate which bank has a stronger position among the three chosen banks. The study will also reveal how each bank pays its debts, dividends and manages their assets most effectively for profit maximizations.