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A SKARI B ANK LIMITED
Askari Commercial Bank Limited (ACBL) was incorporated in Pakistan on October 9, 1991, as a
Public Limited Company. It started its operations during April 1, 1992. The bank principally deals
with banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on the
Karachi, Lahore & Islamabad Stock Exchanges and its shares are currently the highest quoted from
among the new private sector banks in Pakistan.
Askari Bank has expanded into a nationwide presence of 150 branches, and an offshore banking Unit
in Bahrain (wadi-e-kalam). A shared network of over 1,100 online ATMs covering all major cities in
Pakistan supports the delivery channels for customer service.
FUNCTIONS OF ASKARI BANK
Services
Askari Bank offers a wide range of services to its customers and recognizes the importance of
efficient business delivery and providing timely solutions.
Personal Banking
Mortgage Finance
Corporate & Investment Banking
Business Finance
ASKCAR - Car Finance
ASKCARD
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Travelers Cheques
Ask Smart
Profit / Markup Rates on Retail Products
Internet banking
Askari Bank has also introduced online banking. Customers are able to view their bank information
and use their accounts for money transfer and use other features.
Services
Personal Finance
ASKCARDS
Business Finance
Auto Financing
Travelers Cheques
Agriculture finance
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(1) Kissan Ever Green Finance (2) Kissan Tractor Finance.
FINANCIAL STATEMENT
Financial statements are records (Written Report) that provide an indication of an individual’s,
organizations, or business’ financial status. There are four basic types of financial statements: balance
sheets, income statements, cash-flow statements, and statements of retained. Financial statements are
usually compiled on a quarterly and annual basis.
What is Financial Statement Analysis?
Analysis of financial statement means finding out the current position of the company through
various tools like ratio analysis, fund flow analysis. It also involves comparing the company figures
with regard to industry standards or over a period of time.
Data presented in financial statement is of significance to analyst. They develop the relation
among the various items of Balance Sheet and Income Statement and interpret their results in
theoretical perspective. For this analysis they adopt various tool and techniques.
Types of Financial Statement
Balance Sheet
Balance sheet also referred to as statement of financial position or condition, reports on a
company's assets, liabilities, and Ownership equity at a given point in time.
Income Statement
Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a
company's income, expenses, and profits over a period of time. Profit & Loss account provide
information on the operation of the enterprise. These include sale and the various expenses
incurred during the processing state.
Statement of Retained Earnings
Statement of retained earnings explains the changes in a company's retained earnings over the
reporting period.
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Statement of Chas Flow
Statement of cash flows reports on a company's cash flow activities, particularly its operating,
investing and financing activities.
Tool of Analysis
1. Comparative Statement.
2. Absolute Increase/Decrease in % ages.
3. Trend Percentage.
4. Common Size Percentage.
5. Ratio Analysis.
1. COMPARATIVE STATEMENT
In this statement two or more than two years data is presented for comparison.
2. ABSOLUTE INCREASE/DECREASE
It is a type of Horizontal analysis. It gives changes in absolute data intern of Rupees amount. It
enables the analyst to point out the direction of business.
3. TREND PERCENTAGE
This is the second type of horizontal analysis. It is adopted to know the tendencies of business
position. In it one year is chosen as base year and item of financial statement of base year related with
other years relevant items.
4. COMMON SIZE PERCENTAGE
This method is for vertical analysis. It represents the change in percentages in relation to total assets,
total liabilities and owner equity. In this method we take total assets, liabilities and owner equity and
sales individually 100% and develop relationship with their relevant components.
5. RATIO ANALYSIS
Ratio is mathematical relationship of one item to other items. For analysis these ratios are compared
with other year’s relevant ratios or with the ratios of other companies of the same nature are industrial
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averages. Ratios are really adopted to know the liquidity, stability and profitability position of the
company.
R ATIO A NALYSIS
Ratio analysis involves methods of calculating and interpreting financial ratio to analyze and monitor
the firm performances. The basic inputs to ratio analysis are the firm’s balance sheet and income
statement.
T YPES OF R ATIO A NALYSIS
Cross Sectional Analysis
Comparison of two different firms financial ratios at the same point in the times is involvescomparing the firm’s ratios to those of other firms in its industry or to industry averages.
Time-Series Analysis
Evaluation of the firm s financial performance over time using financial ratio analysis means
comparison to current to past performance using ratios enables analyst to access the firm progress.
Combined Analysis
A combined view makes it possible to access the trend in the behavior of the ratio in the
relation to the industry.
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CATEGORIES (LIST) OF FINANCIAL R ATIOS
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BALANCE SHEETS
OF THE HALF YEARS ENDED
(2008 – 2010)
Assets
(Rupee in Thousands) Year 2008 Year 2009 Year 2010
Current Assets
Cash and balances withtreasury banks 11766925 14879230 13356055
Balances with other banks 5550148 7333002 3497054
lending to financial institutions 10172242 8392950 14444143
Account Receivable 85400018 76438647 34747780
Investments 25708194 28625915 39431005
Advances 85976895 99179372 100780162
Total current Assets I39174404 158410469 171508419
Fixed assets
operating fixed Assets 3192862 3810331 5128428 deferred tax 0 0 0
other Assets 2732641 3812788 5535038
Total Assets 145099907 166033588 182171885
Liabilities
Current
Liabilities
Bills Payable 1315680 1839077 2627051
Borrowing 10562338 14964087 17553525
Deposits & other Accounts 118794690 131839283 143036707
Total Current Liabilities
130672
708
1486424
47 145099907
Non-Current
Liabilities
Sub-ordinate Loans 2999700 2998500 2997300
Liabilities against assetssubject to finance lease 1459 0 0
Tax liabilities 567217 736298 471519
Other liabilities 2271393 2603113 3219796
Total Liabilities 136512477 154980358 169905898
Share
Holder’s
Equity
Share Capital 1507018 2004333 3006499 Reserves (R.E) 5862074 5814754 6948336
Inappropriate income 0 1799979 2144810
Surplus on revaluation of
assets- net of tax 1218338 1434164 166342
Total Common Equity 8587430 11053230 12265987
Total Liabilities & Owner Equity
1450999
07 166033588 182171885
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INCOME STATEMENTS
OF THE HALF YEARS ENDED
(2008 – 2010)
(Rupee in Thousands) Year 2008 Year 2009 Year 2010
SALES
Mark-up/Return/Interest earned 8780698 12596921 15143241
COGS Mark-up/Return/Interest expensed 4278374 6977313 8685624
Provision against non-performing loans
and advances-net 638547 1128137 3920240
Provision /(Reversal) for diminution in
the value of investment-net -36555 376 1501
Bad debts Written off directly 0 0 0
3900332 4491095 2535876
OtherIncome Non-mark-up/interest income
Fee, commission, and brokerage income 838561 1013660 1072868
Dividend income 51143 109326 137079
Income from dealing in foreign currencies 356218 584344 655761
Income from sale and Purchase of securities 99825 112474 2361251
Unrealized loss on revaluation of
Investments
Classified as held for trading-net 0 -2308 1728
Other Income 206819 321758 336809
5452898 6630349 7101372
Other
Expenses Non-Mark Up/Interest Expenses
Administrative Expenses 2591985 3277353 4789536
Provision against other assets-net 0 0 0
Other charges 1832 6141 12051
Extra-ordinary/unusual items 0 0 0
2593817 3283494 4801587Gross
Profit Profit Before Taxation (EBIT) 2859081 3346855 2299785
Taxation Taxation-Current 828774 983875 98535
-Prior Years -188247 0 -233950
-Deferred 196558 113006 -245812
Net Profit Profit After Taxation 2021996 2249974 2681012
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1. LIQUIDIT RATIO
Liquidity ratios measure of the amount of funds a company can quickly use to settle its debts.
Net Working Capital Ratio
Current Ratio
Quick(Acid-test) Ratio
Net Working Capital Ratio
A measure of both a company's efficiency and its short-term financial health. The working capital
ratio is calculated as:
Formula = Total current assets – Total current liabilities = NWC Ratio
2010 = 171508419 – 145099907 = 26408512
2009 = 158410469 – 148642447 = 9768022
2008 = I39174404 – 130672708 = 8501696
0
5 0 0 0 0 0 0
1 0 0 0 0 0 0 0
1 5 0 0 0 0 0 0
2 0 0 0 0 0 0 0
2 5 0 0 0 0 0 0
3 0 0 0 0 0 0 0
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
The analysis shows that Net Working Capital Ratio has increased in 2010 to 26408512 but it has
decreased in 2009 to 9768022, and in 2008 to 8501696.
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Current Ratio
It measures the firm’s ability to meet its short term obligation. The current ratio is the ratio of
current assets to current liabilities: It is expressed as follows.
Formula = Current Assets
Current Liabilities
2010 = 171508419 = 1.182%
145099907
2009 = 158410469 = 1.605%
1486424472008 = I39174404 = 1.065%
130672708
0
0.5
1
1.5
2
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
The analysis shows that Current Ratio has increased in 2010 to 1.182, but it has decreased to 1.605 in
2009, and in 2008 to 1.065.
Quick(Acid-Test) Ratio
It measures ability to meet short-term cash needs more rigorously by eliminating inventory.
Formula = Current Assets - Inventory
Current Liabilities
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2010 = 171508419 - 158152364 = 0.914%
145099907
2009 = 158410469 - 14351239 = 0.969%
1486424472008 = I39174404 - 127407479 = 0.090%
130672708
0
0.2
0.4
0.6
0.8
1
1.2
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
Analysis shows that Quick (Acid-Test) Ratio has decreased to 0.090 in 2008 as compared to 2010
which is 0.914. It again strengthened in 2009 to 0.969.
2. ACTIVITY RATIO
Activity ratios measure how quickly a firm converts non-cash assets to cash assets.
Account Receivable Turnover
Average Collection Period
Inventory Turnover
Average Age of Inventory
Total Assets Turnover
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Account Receivable Turnover
It gives the number of times accounts receivables is collected during the year.
Formula = Net Credit Sales
Average Account Receivables
2010 = 15143241 = 0.435 times
34747780
2009 = 12596921 = 0.164 times
7643864
2008 = 8780698 = 0.010 times
8540001
0
0.1
0.2
0.3
0.4
0.5
2 00 8 2 00 9 2 01 0
Times
Years
Interpretation
Analysis shows that Account Receivable Turnover Ratio has decreased to 0.010 in 2008 as compared
to 2009 which is 0.164. It again strengthened in 2010 to 0.435.
Average Collection Period
It measures the average amount of the time that needed to collect accounts receivables.
Formula = _______365 _______
Account Receivables Turnover
2010 = ___365 = 839.0 days
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0.435times
2009 = ___365 = 2225.6 days
0.164 times
2008 = ___365 = 35500 days
0.010 times
05 0 0 0
1 0 0 0 01 5 0 0 02 0 0 0 02 5 0 0 03 0 0 0 03 5 0 0 04 0 0 0 0
2 00 8 2 00 9 2 01 0
Days
Years
Interpretation
Analysis shows that Average Collection Period has decreased to 839.0 in 2010 as compared to 2009
which is 2225.6. It again strengthened in 2008 to 35500.
Inventory Turnover
It measures the activity or liquidity of the firm’s inventory.
Formula = Cost of Goods Sold
Average Inventory
2010 = 8685624 = 0.054 times
1581523642009 = 6977313 = 0.486 times
14351239
2008 = 4278374 = 0.033 times
127407479
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00.1
0.2
0.3
0.4
0.5
0.6
2 00 8 2 00 9 2 01 0
Days
Years
Interpretation
Analysis shows that Inventory Turnover has decreased to 0.033 times in 2008 as compared to 2010
which is 0.054 times. It again strengthened in 2009 to 0.468 times.
Average Age Inventory
Average inventory is determine by the beginning and ending and dividing by 2.
Formula = ______365_______
Inventory Turnover
2010 = ___365 = 6759 Days
0.054 times
2009 = ___365 = 751 Days
0.486 times
2008 = ___365 = 11060 Days
0.033 times
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02 0 0 0
4 0 0 0
6 0 0 0
8 0 0 0
1 0 0 0 0
1 2 0 0 0
2 00 8 2 00 9 2 01 0
Days
Years
Interpretation
Analysis shows that Average Age Inventory has decreased to 751 days in 2009 as compared to 2010
which is 6759 days. It again strengthened in 2008 to 11060 days.
Total Assets Turnover
It indicates the efficiency with which the firm uses it assets to generate sales.
Formula = _____Net Sales ____
Average Total Assets
2010 = 15143241 = 0.083%
182171885
2009 = 12596921 = 0.075%
166033588
2008 = 8780698 = 0.060%
145099907
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00.02
0.04
0.06
0.08
0.1
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
Analysis shows that Total Assets Turnover has decreased to 0.060 in 2008 as compared to 2009
which is 0.075. It again strengthened in 2010 to 0.083.
3. LEVERAGE/DEBET/CAPTAL STRUCTURE RATIOS
Leverage/ Capital Structure/ Debt ratios measure the firm's ability to repay long-term debt.
Debt Ratio.
Debt/Equity Ratio.
Time Interest Earned.
Debit Ratio
It measures the proportion of the total assets financed by the firm’s credit.
Formula = Total Liabilities (Debt)
Total Assets
2010 = 169905898 = 0.932%
182171885
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2009 = 154980358 = 0.933%
166033588
2008 = 136512477 = 0.940%
145099907
0.928
0.93
0.932
0.934
0.936
0.938
0.94
0.942
2 00 8 2 00 9 2 01 0
Percentage
Year
Interpretation
Analysis shows that Debt Ratio has decreased to 0.932 in 2010 as compared to 2009 which is 0.933.
It again strengthened in 2008 to 0.940.
Debt Equity Ratio
It significant measure of solvency since a high degree of debt in the capital structure may make it
difficult for the company to meet interested charges and principles payments at maturity.
Formula = Total Liabilities
Total Stock Holder’s Equity
2010 = 145099907 = 11.82%
122659872009 = 148642447 = 13.44%
11053230
2008 = 130672708 = 15.21%
8587430
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02468
10121416
2 00 8 2 00 9 2 01 0
Percentage
Year
Interpretation
Analysis shows that Debt Equity Ratio has decreased to 11.82 in 2010 as compared to 2009 which is
13.44. It strengthened in 2010 to 15.21.
Time Interest Earned /Interest Coverage Ratio
It measures the firm ability to make contractual interest payments, sometimes called the interest
coverage ratio.
Formula = ______ EBIT _ _____
Interest (Expenses)
Note: There is no Interest expenses .All of the interest expenses are included in the Cost of Good
Sold .This is the interest expenses but it is direct Cost.
4. PROFITABILTY RATIO
Profitability ratios measure the firm's use of its assets and control of its expenses to generate an
acceptable rate of return.
Gross Profit Margin.
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Profit Margin.
Return on Total Assets.
Return on Common Equity.
Gross Profit Margin
It expresses the relationship of gross profit to net sales and is expressed in terms of percentage. This
ratio is a tool that indicates the degree to which selling price of goods per unit may decline without
resulting in losses.
Formula = Gross Profit x 100
Net Sales
2010 = 2535876 x 100 = 0.167%
15143241
2009 = 4491095 x 100 = 0.356%
12596921
2008 = 3900332 x100 = 0444%
8780698
0
0.1
0.2
0.3
0.4
0.5
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
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Analysis shows that Cash Ratio has decreased to 0.155 in 2007 as compared to 2006 which is 0.184.
It again strengthened in 2008 to 2.28 while dropped to 0.20 in 2009.
(Operating) Profit Margin
This ratio establishes a relationship between cost of goods sold plus other operating expenses and net
sales. This ratio is calculated mainly to ascertain the operational efficiency of the management in their
business operations.
Formula = Cost of goods sold + operating expenses
Net sales
2010 = 8685624 + 4801587 = 0.890%
15143241
2009 = 6977313 + 3283494 = 0.814%
12596921
2008 = 4278374 + 2593817 = 0.782%
8780698
0.7
0.75
0.8
0.85
0.9
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
Analysis shows that Operating profit Margin has decreased to 0.782 in 2008 as compared to 2009
which is 0.814. It again strengthened in 2010 to 0.890.
Return On Total Assets
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It measures the overall effectiveness of management in generating profits with its available assets
also at ROI.
Formula = Earning Available for Common Stockholder’s
Total Assets
2010 = 2681012 = 0.014%
182171885
2009 = 2249974 = 0.013%
166033588
2008 = 2021996 = 0.013%
145099907
0.01240.01260.0128
0.0130.01320.01340.01360.0138
0.0140.0142
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
Analysis shows that Return on Total Assets has increased to 0.014 in 2010. While it again decreased
in 2009 to 0.013% while dropped to 0.013% in 2008.
Return On Total Equity
It measures the return earned on the common stock holder’s investment in the firms.
Formula = Earning Available for Common Stockholder’s
Common Stock Equity
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2010 = 2681012 = 0.891%
3006499
2009 = 2249974 = 1.122%
2004333
2008 = 2021996 = 1.008%
2004333
0
0.2
0.4
0.6
0.8
1
1.2
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
Analysis shows that Return on Total Equity has decreased to 0.891% in 2010 as compared to 2008
which is 1.008%. It again strengthened in 2009 to 1.112%.
5.MARKET VALUE
Market ratios measure investor response to owning a company's stock and also the cost of issuing
stock. it relates a firm market value as erasure by its current share pries to certain accounting value.
Earning Per Share.
Price/Earnings Ratio.
Book Value Par Share.
Dividend Yield
Dividend Payout.
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Earning Per Share
It measures ability to meet short-term cash needs more rigorously by eliminating inventory.
Formula = Net Income – Preferred Dividends
Common Stock Standing
Assuming Share Price Rs.1 then…
2010 = 2681012 - 0 = 0.891%
3006499
2009 = 2249974 - 0 = 1.122%
20043332008 = 2021996 - 0 = 1.341%
1507018
00.20.40.60.8
11.21.41.6
2 00 8 2 00 9 2 01 0
percentage
year
Interpretation
Analysis shows that Cash Ratio has decreased to 0.891% in 2010 as compared to 2009 which is
1.112%. It again strengthened in 2008 to 1.341%.
Pries /Earning Ratio
It relates earnings per common share to the market price at which the stock trades, expressing the
“multiple” that the stock market places on a firm’s earnings.
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Formula = Market Price Per Share
Earning Per Share
2010 = 182171885 = 59.43%
30064992009 = 166033588 = 82.83%
2004333
2008 = 145099907 = 96.28%
1507018
0
2 04 0
6 0
8 0
1 00
1 20
2 00 8 2 00 9 2 01 0
Percentage
Year s
Interpretation
Analysis shows that Price Earning Ratio has decreased to 0.155 in 2007 as compared to 2006 which
is 0.184. It again strengthened in 2008 to 2.28 while dropped to 0.20 in 2009.
Dividend Yield
It shows the relationship between cash dividends and market price.
Formula = Divided Per Shares
Market Price Per Share
2010 = 3370000 = 60.47%
5573149
2009 = 2694106 = 69.06%
3901279
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2008 = 1638357 = 54.13%
3026550
7 5 0 0 0 0 0
8 0 0 0 0 0 0
8 5 0 0 0 0 0
9 0 0 0 0 0 0
9 5 0 0 0 0 0
1 0 0 0 0 0 0 0
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
Analysis shows that Dividend Yield has decreased to 54.13% in 2008 as compared to 2010 which is
60.47%. It again strengthened in 2009 to 69.06%.
Dividend Payout
It determined by the formula cash dividends per share divided by earnings per share.
Formula = Dividend per Shares
Earning Per Share
2010 = 3370000 = 60.47%
5573149
2009 = 2694106 = 69.06%
3901279
2008 = 1638357 = 54.13%
3026550
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7 5 0 0 0 0 0
8 0 0 0 0 0 0
8 5 0 0 0 0 0
9 0 0 0 0 0 0
9 5 0 0 0 0 0
1 0 0 0 0 0 0 0
2 00 8 2 00 9 2 01 0
Percentage
Years
Interpretation
Analysis shows that Dividend Payout has decreased to 54.13% in 2008 as compared to 2010 which is
60.47%. It again strengthened in 2009 to 69.06%.
Text References
1. Managerial Finance by JAE K. SHIM, JOEL g. SIEGEL.
2. Principle of Managerial Finance 11th Edition by Lawrence J.Gitman.
3. Askari Bank Quarterly Report March of (2010) of ACBL.
References www.google.com
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www.askaribank.com