Ratio Analysis and its outcomes

Ratio analysis plays a very significant role in analyzing a company’s financial position and its performance. This technique is mainly used to analyze financial statements which help in comprehending the true financial position of the company. Ratio analysis is essential when there is a need to compare different organizations competing in a similar market for the same customer segment, in such cases ratio analysis helps in comparing financial performance of each company operating in the same sector to see which firm is financially strong compared to its rivals.

Investors, bankers, CFO’s and management of financial institutions use ratio analysis to locate weaknesses in the company and devise ways to overcome these weaknesses. Investors will invest in a firm which has a strong financial position. Another use for ratio analysis is to perform a trend analysis by comparing past trends and use them to establish stable future trends, in other words ratios help in planning for the future of the company.

Analysis of Soneri Bank and National bank with United bank

This study has been conducted over the topic of Ratio analysis of three banks in the private / Government sector namely Soneri Bank, United Bank and National Bank of Pakistan, reason for selecting this topic is that it will enable us to see which bank holds a stronger financial position among the three.

Banks’ official websites were mainly used for data collection, most of the collected data is secondary data obtained from the websites of all three banks. All necessary calculations and analysis were performed on Microsoft Excel sheet. During analysis the following findings were noted which are given below.

1. UBL net profit ratio is more as compare to NBP and Soneri bank whereas NBP secure second and Soneri secures third position in the analysis.
2. Operating cash flow of Soneri bank is high as compare to other two banks while UBL is at second position in getting cash flows and NBP is at third.
3. As far as gross spread ratio is concerned Soneri bank get least gross spread than others while UBL gets the highest and NBP is at second number.

Consult conclusion for more finding ratio analysis of mentioned banks. 

Ratio Analysis and its significance

The significance of this study is that it shows the overall financial condition of all the three banks. We conducted ratio analysis as it shows the performance of a company and identify weak areas that need to be improved. The banks managers will be able to evaluate all aspects of their daily business including employee performance, credit worthiness, efficiency of operations, and credit policy. This study will assist investors in making investment decisions based on the results of this study. Bank position in the banking sector can be easily analyzed by the help of this study.

Towards the end of this research the reader will be able to know which bank is better capable of paying its current liabilities by effectively utilizing its cash equivalents. Another important outcome of this study will be that it will help its readers in explaining the different concepts regarding financial ratio analysis in baking sector by applying different ratios. Bank managers will be able to determine their strength and weaknesses of their respective banks.

Final Project Finance on Ratio Analysis of above title is available

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