a comparative analysis of the financial ratios of selected banks in the india for the period of...

8/9/2019 A Comparative Analysis of the Financial Ratios of Selected Banks in the India for the Period of 2011-2014

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Research Journal of Finance and Accounting www.iiste.org

ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#

'ol.() No.19) 2*1%

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A Comparative Analysis of the Financial Ratios of Selected Banks

in the India for the period of 2011-2014

Rohit ,ansal

Assistant !rofessor

e"artent of anageent studies)Ra/i0 andhi Institute of !etroleu echnolog3)

4ail5 ransalrgi"t.ac.in) rohitansaliitrgail.co

Astract

8ost financial stateent anal3ses focus on firs elonging to industries that either contriute significantl3 to

econoic figures or "osit in a highl3 co"etiti0e usiness en0ironent. he o/ecti0e of this "a"er is an

anal3sis done to see the etent to which a co"an3 has i"leented using rules financial "erforance is good

and right. his stud3 in0estigates "erforance of coercial an:ing sector for the "eriod of A"ril- 2*11 to

8arch -2*1%. Financial stateents of Ais an:) I;I;I an:) Federal an: and uidit3 and sol0enc3

"erforance of four a/or Indian coercial an:s. his research is to anal3=e the financial stateents of these

an:s using li>uidit3 ratios) acti0it3 ratios) le0erage ratios) "rofitailit3 ratios) and ar:et 0alue ratios. For

li>uidit3) the following ratios were used5 current ratio) >uic: or acid-test ratio. For acti0it3) In0entor3 turno0er

ratio) detor turno0er ratio and wor:ing ca"ital turno0er ratios were used. For le0erage) the following ratios were

used i.e. det ratio) e>uit3 ratio) and interest co0erage ratio. For "rofitailit3) "rofit argin) net "rofit argin)

return on assets) return on shareholder?s e>uit3) and earnings "er share were used. For ar:et 0alue) "rice-

earnings ratio and earning "ar share ratios were used.

!ey"ords5 ;urrent Ratio) Acid ratio) @uic: ratio) Return on Assets R&A#) Return on Shareholder?s 4>uit3R&N#) 4arning "er share 4!S#.

1#0 I$%R&'(C%I&$

he assi0e aount of nuers in a co"an3Bs financial stateents can e ewildering and intiidating to

an3 in0estors. &n the other hand) if 3ou :now how to anal3=e the) the financial stateents are a gold ine ofinforation. Financial stateents are the ediu 3 which a co"an3 discloses inforation concerning itsfinancial "erforance. Followers of fundaental anal3sis use the inforation ta:en fro financial stateents to

a:e in0estent decisions.

A recent article "ro0ides con0incing e0idence that data ites stored in large dataases ha0e significant

rates of errors Clein) oodhue and a0is) 1997#. he "role is ee"lified 3 the ;&8!DSA and ;RS!

8onthl3 Return a"e which are ista:enl3 thought to e accurate ecause the3 re"ort inforation for "ulicl3

owned co"anies.


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adinistrator of the Dnit rust India DI#) Gife Insurance ;or"oration of India GI;#) eneral Insurance

;or"oration Gtd I;G#) National Insurance ;o"an3 Gtd NI;G#) he New India Assurance ;o"an3

NIA;#) he &riental Insurance ;or"oration &I;#) and Dnited India Insurance ;o"an3 DII;#. he Dnit

rust of India holds a s"ecial "osition in the Indian ca"ital ar:ets and has "rooted an3 leading financial

institutions in the countr3. !roducts5 credit cards) consuer an:ing) cor"orate an:ing) finance and insurance)

in0estent an:ing) ortgage loans) "ri0ate an:ing) "ri0ate e>uit3 and wealth anageent. Ais an: o"enedits registered office in Ahedaad and cor"orate office in 8uai in eceer 199+. he first ranch was

inaugurated on 2nd

A"ril 199% in Ahedaad 3 r. 8anohan Singh) the then finance inister of India. As on

+1-8ar-2*1%) the an: had a networ: of 2%*2 ranches and etension counters and 12)922 A8s. Ais an:

o"erates in four segents5 reasur3 o"erations) retail an:ing) cor"orateHwholesale an:ing and other an:ing

usiness.

1#1#2 .&(SI$) '*/*,&*$% FI$A$CI$) C&R&RA%I&$ .'FC BA$!

uit3 and wealth anageent. It o"erates in three segents5 wholesale

an:ing ser0ices) retail an:ing ser0ices and treasur3 o"erations. he an: has o0erseas ranch o"erations in

,ahrain and uarters

are at Alu0a) Cochi and Cerala. It is the fourth largest an: in India in ters of ca"ital ase. As of +*th

June

2*1%) federal an: has 12*+ ranches s"read across 2% states and 1+92 A8s across the countr3. !roducts5

loans) sa0ings) deit cards) internet an:ing) tra0el cards) life insurance) general insurance etc. As go0ernent of

India has decided to introduce Birect ;ash ransferB ;# of 0arious welfare schees directl3 to eneficiaries?

an: account which is lin:ed with Aaddhaar nuer w.e .f 1stJanuar3 2*1+) federal an: custoers can lin:

their Aaddhaar account.

1#1#4 I$'(S%RIA, CR*'I% A$' I$/*S%*$% C&R&RA%I&$ &F I$'IA ICICI BA$!

I;I;I an: was estalished 3 the Industrial ;redit and In0estent ;or"oration of India I;I;I#) an Indian

financial institution) as a wholl3 owned susidiar3 in 199%. he "arent co"an3 was fored in 19(( as a /oint-

0enture of the orld ,an:) IndiaBs "ulic-sector an:s and "ulic-sector insurance co"anies to "ro0ide "ro/ect

financing to Indian industr3. he an: was initiall3 :nown as the Industrial ;redit and In0estent ;or"orationof India ,an:) efore it changed its nae to the are0iated ICICI Bank.he "arent co"an3 was later erged

with the an:. I;I;I ,an: launched internet an:ing o"erations in 199$. I;I;I an: is an Indian ultinational

an:ing and financial ser0ices co"an3. It head>uarter is in 'adodara. As of 2*1%) it the second largest an: in

India in ters of assets and ar:et ca"itali=ation. he an: has a networ: of +)$** ranches and 11)162 A8s

in India) and has a "resence in 19 countries. I;I;I ,an: is one of the ig four an:s of India) along with state

an: of India) !un/a national an: and an: of ,aroda. he an: has susidiaries in the Dnited Cingdo)Russia) and ;anadaE ranches in Dnited States) Singa"ore) ,ahrain)


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and) Rosenerg and uent studies ha0e atte"ted to deonstrate the "redicti0e 0alue of 0arious

techni>ues for estiating actual usiness "erforance.

Foster) 19$6# re0iewed of the literature descriing ethods and theories for e0aluating and "redicting

financial "erforance re0eals that although ethods ha0e ecoe increasingl3 co"le) few researchers

ade>uatel3 address the "roles associated with the sa"le used. For ea"le) ost ratio anal3sis studies use

ulti0ariate anal3sis that is ased on the assu"tion of a noral distriution of the financial ratios. ithoutconfiring the a""roiation of noralit3 of ratio distriution) the researcher is at ris: of drawing erroneous

inferences. hen considering the distriution of financial ratios in an3 dataase) the noralit3 of the distriution

can e s:ewed 3 data recording errors) negati0e denoinators and denoinators a""roaching =ero.

8alhorta and 8cGeod) 199%# argued that the onl3 wa3 to assess future financial "erforance is through the

inclusion of su/ecti0e easures.Ross et al.) 2**7# i"lied that the ost researchers di0ide the financial ratios into four grou"s i.e "rofitailit3)sol0enc3) li>uidit3 and acti0it3 ratios. Gasher) 2**(# re0iewed de"t ratiosshow how effecti0el3 the organi=ation

uses other "eo"le?s one3 and whether it is using a lot of orrowed one3. arawneh) 2**6# descried the

nature of the organi=ation influences the ratios e"lo3ed. For ea"le) in the case of a an:) the li>uidit3 ratio

is used to deterine the aount of li>uidit3 that a an: needs in order to eet its liailitiesE a an: also uses

"rofitailit3 ratios. Gerac:) 2**+# argued the enefits of financial ratios anal3sis5 Financial ratios are an

i"ortant and well-estalished techni>ue of financial anal3sis. he following are the enefits of financial ratios

anal3sis.

,righa and 4hrhardt 2*1*# stated financial ratios are designed to hel" e0aluate financial stateents.

Financial ratios are used as a "lanning and control tool. Financial ratios anal3sis is used to e0aluate the

"erforance of an organi=ation5 it ais to deterine the strong and wea: "oints and it offers solutions 3

"ro0iding a""ro"riate "lans.

iwari and !arra3 2*12# e"lained in detail the anal3sis of financial stateents of Rana3 ltd. It

"ro0ides insights into two widel3 used financial tools) ratio anal3sis and coon si=e stateents anal3sis. he

o/ecti0e of this "a"er is to hel" the reader understand how these tools should e used to anal3=e the financial

"osition of a fir. o deonstrate the "rocess of financial anal3sis) Rana3 Giited?s alance sheet and incoe

stateents are anal3=ed in this "a"er. A financial stateent is a collection of data organi=ed according to logical

and consistent accounting "rocedures. Its "ur"ose is to con0e3 an understanding of soe financial as"ect of a

usiness fir. Financial anal3sis also referred to as financial stateent anal3sis or accounting anal3sis# refers to

an assessent of the 0iailit3) stailit3 and "rofitailit3 of a usiness) su usiness or "ro/ect.

ACC&($%I$) S%A%**$%S

The Income Statementhile the alance sheet ta:es a sna"shot a""roach in eaining a usiness) the incoe stateent easures a

co"an3Bs "erforance o0er a s"ecific tie frae. echnicall3) 3ou could ha0e a alance sheet for a onth or

e0en a da3) ut 3ouBll onl3 see "ulic co"anies re"ort >uarterl3 and annuall3. he incoe stateent "resents

inforation aout re0enues) e"enses and "rofit that was generated as a result of the usinessB o"erations for that

"eriod.

The Balance Sheethe alance sheet re"resents a record of a co"an3Bs assets) liailities and e>uit3 at a "articular "oint in tie.

he alance sheet is naed 3 the fact that a usinessB financial structure alances in the following anner5

Assets = Liabilities + Shareholders\Equity . Eqn !"

Assets re"resent the resources that the usiness owns or controls at a gi0en "oint in tie. his includes ites

such as cash) in0entor3) achiner3 and uildings. he other side of the e>uation re"resents the total 0alue of the

financing the co"an3 has used to ac>uire those assets. Financing coes as a result of liailities or e>uit3.Giailities re"resent det which of course ust e "aid ac:#) while e>uit3 re"resents the total 0alue of one3

that the owners ha0e contriuted to the usiness - including retained earnings) which is the "rofit ade in

"re0ious 3ears.


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2#1 !ey financial ratios5

here are fi0e categories of ratios used in financial stateent anal3sis. hese are5

1# Gi>uidit3 ratios) which easure a fir?s ailit3 to eet cash needs as the3 arise.

2# !rofitailit3 ratio) which easure the o0erall "erforance of a fir and its efficienc3 in anaging assets)

liailities) and e>uit3.

+# Acti0it3 ratios or turno0er ratio) which easures the li>uidit3 of s"ecific assets and the efficienc3 ofanaging assets.

%# Assets turno0er or anageent) which e0aluates how well a co"an3) is utili=ing its assets to "roduce

re0enue.

(# Gong ter det of le0erage ratios) which easure the etent of a fir?s financing with det relati0e to e>uit3

and its ailit3 to co0er interest and other fied charges Fraser K &riston) 2**%#E and

6# 8ar:et 0alue ratios ring to the stoc: "rice and gi0e an idea of what in0estors thin: aout the fir and its

future "ros"ects ,righa K


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2#< S&,/*$C7 RA%I&

Inventory t8rnover ratioA ratio showing how an3 ties a co"an3Bs in0entor3 is sold and re"laced o0er a "eriod. he da3s in the

"eriod can then e di0ided 3 the in0entor3 turno0er forula to calculate the da3s it ta:es to sell the in0entor3

on hand or Lin0entor3 turno0er da3s. It is calculated as5

In)entory turno)er ratio = #ost o, oods sold % A)erae in)entory . !.:"'etor t8rnover ratio

An acti0it3 or turno0er ratio is calculated as credit sales 3 a0erage detors. A high detor turno0er ratio is not

good for a co"an3. It is calculated as5

;ebtor turno)er ratio = #redit sales % A)erae debtors .. !.!uit3.

It indicates what "ro"ortion of e>uit3 and det the co"an3 is using to finance its assets. It is calculated as5

;ebt to equity=Lon term debt or liabilities % Total equity . !.!1"

Interest covera9e ratio

A ratio used to deterine how easil3 a co"an3 can "a3 interest on outstanding det. he interest co0erage ratio

is calculated 3 di0iding a co"an3Bs earnings efore interest and taes 4,I# of one "eriod 3 the co"an3Bs

interest e"enses of the sae "eriod5 It is calculated as5

Interest co)erae ratio = EBIT % Interest e/8enses .. !.!2"

'(&$% A$A,7SIS

A ethod of "erforance easureent has started 3 the u!ont ;or"oration in the 192*s. ith this ethod)

assets are easured at their gross oo: 0alue rather than at net oo: 0alue in order to "roduce a higher return on

e>uit3 R&4#. uit3.

he u!ont s3ste hel"s the anal3st see how the fir?s decisions and acti0ities o0er the course of an

accounting "eriod interact to "roduce an o0erall return to fir?s shareholders) the return on e>uit3 Fraser K

&riston) 2**%#. 8oreo0er) according to ,righa and uit3 can e found as the "roduct of "rofit argin) total assets turno0er) and the e>uit3 ulti"lier. It

shows the relationshi"s aong acti0it3) le0erage) and "rofitailit3 ratios. It is calculated as5

;uont analysis = ro,it a,ter ta/ % Total assets !.!5"

3#0 R*S*ARC. *%.&'&,&)7

3#1 Research prolem and o>ectives

his research "a"er ais to easure the financial "erforance of Indian an:ing industries such as AMIS)

I;I;I) uidit3) "rofitailit3) sol0enc3) ar:et ased ratio) and le0erage

ratio. his find out to "ro0ide an answer to the >uestion5 what are the norms, industry figures, and peculiarities

in thebankingsector of the Indian market using liquidity, activity, leverage, profitability, and market value ratios?

8oreo0er) this stud3 s"ecificall3 ais to eet the following o/ecti0es5

1. o deterine the li>uidit3) acti0it3) le0erage) "rofitailit3) and ar:et 0alue ratios of AMIS) I;I;I)


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+. o find co"arati0e financial anal3sis aong these an:ing co"anies.

%. o e0aluate financial "erforance using u!ont anal3sis.

3#2 '*SCRI%I/* S%A%IS%ICS

%AB,* 1 FI$A$CIA, RA%I&S &F A+IS BA$!

ale 1 e"lains the result of se0eral financial ratios of AMIS ,ANC fro 2*11 to 2*1%. It contains li>uidit3ratio i.e. current ratio and acid test ratio) "rofitailit3 ratio i.e. return on assets R&A#) return on net worth

R&N#) return on ca"ital e"lo3ed R&;4#) earning "ar share 4!S#) "rice earning ratio !H4#) net "rofit

argin) and "rofit argin) acti0it3 ratio i.e. in0entor3 turno0er ratio) detor turno0er ratio) and wor:ing ca"ital

turno0er assets turno0er ratio i.e. fied assets and total assets turno0er. Ge0erage ratio i.e. det to e>uit3) interest

co0erage ratio) share holderBs e>uit3 ratio) and return on total asset and finall3) u!ont anal3sis ha0e een

e"lo3ed in this "a"er to easured the financial "erforance of a co"an3.

Ratios 2014 2013 2012 2011

;urrent Ratio *.16 *.1( *.11 *.1+

@uic: Ratio *.*6 *.*7 *.*( *.*+

Return &n Assets $.%1 7.+( 6.%6 (.62

Return &n ShareholderBs 4>uit3 +%.($ 26.7+ 22.29 16.6*

4arning !er Share 1$*.(6 1$+.*$ 99.9+ 127.*1

!rice 4arnings Ratio 9.+* 1*.(7 11.1% 16.1*

Net !rofit 8argin *.16 *.1( *.1( *.17

!rofit 8argin *.%+ *.+7 *.+% *.+%

etor urn &0er Ratio *.11 *.11 *.11 *.*9

or:ing ;a"ital urn &0er *.$+ *.9* 1.*$ *.72

otal Assets urn &0er *.1* *.1* *.1* *.*$et o 4>uit3 7*9.+( 6++.*9 61%.$6 (2%.7(

Interest ;o0erage Ratio *.++ *.+* *.+* *.+9

u!ont Anal3sis *.*% *.*% *.*+ *.*+

%AB,* 2 FI$A$CIA, RA%I&S &F ICICI BA$!

ale 2 e"lains the result of se0eral financial ratios of I;I;I ,ANC fro 2*11 to 2*1%. It contains li>uidit3

ratio i.e. current ratio and acid test ratio) "rofitailit3 ratio i.e. return on assets R&A#) return on net worthR&N#) return on ca"ital e"lo3ed R&;4#) earning "ar share 4!S#) "rice earning ratio !H4#) net "rofit

argin) and "rofit argin) acti0it3 ratio i.e. in0entor3 turno0er ratio) detor turno0er ratio) and wor:ing ca"ital




ICICI BA$!

Ratios 2014 2013 2012 2011

;urrent Ratio *.*2 *.*2 *.*2 *.*2

@uic: Ratio *.** *.*1 *.** *.*1Return &n Assets 6.6+ (.7+ %.7* %.2%

Return &n ShareholderBs 4>uit3 17.*7 1+.++ 9.96 7.%$

4arning !er Share %79.99 169.%9 99.7* 66.79

!rice 4arnings Ratio 12.+2 1+.$% 16.%% 22.6$Net !rofit 8argin *.1$ *.17 *.16 *.16!rofit 8argin *.+6 *.+2 *.2$ *.26

etor urn &0er Ratio *.11 *.11 *.1* *.1*

or:ing ;a"ital urn &0er *.9+ *.$2 *.$1 *.6$

otal Assets urn &0er *.*9 *.*9 *.*$ *.*$

et o 4>uit3 %21.+( +79.6+ +%+.2+ 29*.9$

Interest ;o0erage Ratio *.+( *.+2 *.2$ *.+*u!ont Anal3sis *.*+ *.*+ *.*2 *.*2

%AB,* 3 FI$A$CIA, RA%I&S &F .'FC BA$!

ale + e"lains the result of se0eral financial ratios of uidit3

ratio i.e. current ratio and acid test ratio) "rofitailit3 ratio i.e. return on assets R&A#) return on net worth

R&N#) return on ca"ital e"lo3ed R&;4#) earning "ar share 4!S#) "rice earning ratio !H4#) net "rofitargin) and "rofit argin) acti0it3 ratio i.e. in0entor3 turno0er ratio) detor turno0er ratio) and wor:ing ca"ital


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.'FC BA$!

Ratios 2014 2013 2012 2011

;urrent Ratio *.12 *.11 *.1* *.1(

@uic: Ratio *.*2 *.*2 *.*2 *.*2

Return &n Assets 7.79 7.%2 6.6( 6.*9

Return &n ShareholderBs 4>uit3 %*.$7 +1.79 2%.16 1$.1$

4arning !er Share 6*1.22 29%.7* 27%.9* 199.12

!rice 4arnings Ratio 1$.7+ 21.%6 %6.*+ 2(.%2

Net !rofit 8argin *.17 *.16 *.16 *.16

!rofit 8argin *.%* *.+6 *.+( *.+(

etor urn &0er Ratio *.12 *.12 *.12 *.11

or:ing ;a"ital urn &0er 1.*7 1.27 1.27 *.7+

otal Assets urn &0er *.1* *.1* *.1* *.*9

et o 4>uit3 $6$.%2 7*(.2* ($1.%* %79.2*

Interest ;o0erage Ratio *.+7 *.+( *.+% *.%2

u!ont Anal3sis *.*% *.*% *.*+ *.*+

%AB,* 4 FI$A$CIA, RA%I&S &F F*'*RA, BA$!

ale % e"lains the result of se0eral financial ratios of F44RAG ,ANC fro 2*11 to 2*1%. It contains

li>uidit3 ratio i.e. current ratio and acid test ratio) "rofitailit3 ratio i.e. return on assets R&A#) return on networth R&N#) return on ca"ital e"lo3ed R&;4#) earning "ar share 4!S#) "rice earning ratio !H4#) net

"rofit argin) and "rofit argin) acti0it3 ratio i.e. in0entor3 turno0er ratio) detor turno0er ratio) and wor:ing

ca"ital turno0er assets turno0er ratio i.e. fied assets and total assets turno0er. Ge0erage ratio i.e. det to e>uit3)

interest co0erage ratio) share holderBs e>uit3 ratio) and return on total asset and finall3) u!ont anal3sis ha0e

een e"lo3ed in this "a"er to easured the financial "erforance of a co"an3.

F*'*RA, BA$!

Ratios 2014 2013 2012 2011

;urrent Ratio *.21 *.1( *.19 *.1*@uic: Ratio *.1+ *.*9 *.12 *.*1Return &n Assets +.6+ 2.26 2.*2 1.9*

Return &n ShareholderBs 4>uit3 7.92 %.69 +.(7 2.$%

4arning !er Share 1(.2( 21.$2 19.1% +%.$(

!rice 4arnings Ratio 2%.69 1*.*$ 11.7( 1+.(6

Net !rofit 8argin *.11 *.1+ *.1+ *.11

!rofit 8argin *.1$ *.1+ *.1+ *.12etor urn &0er Ratio *.12 *.1* *.*9 *.*9

or:ing ;a"ital urn &0er *.62 *.7* *.(* *.96

otal Assets urn &0er *.1* *.*9 *.*$ *.*$

et o 4>uit3 +$2.$9 +67.%2 +11.*2 262.+6

Interest ;o0erage Ratio *.1$ *.22 *.2( *.21

u!ont Anal3sis *.*2 *.*1 *.*1 *.*1

4# R*S(,%S A$' ,*AR$I$) I$SI).%S

his "art of the research "a"er is organi=ed using the fi0e categories of financial ratios. S"ecific ratios for each

categor3 are also "resented and discussed. At the end of this "art) the u!ont e>uation deri0ed was also

"resented and discussed.

4#1 ,I6(I'I%7 RA%I&S

2.!.! #urrent ratio analysis and insi9hts

his ratio shows the current assets a0ailale to co0er current liailities at the alance sheet date. here should e

a reasonale uffer of current assets o0er current liailities as an indication of the ailit3 of the fir to "a3 its

dets as and when the3 fall due. Fro the 3ear 2*11-2*1%) the current ratio for I;I;I an: is alost constant.

he current ratio for Ais and ual

and then increased for the 3ear 2*1% in the gra"h. So we infer that Federal an: has greater no of resources to"a3 off its current dets.


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2.!.* &uic' ratio analysis and insi9hts

As a su""leent to current ratio) >uic: or acid-test ratio ais to show the ore li>uid current assets a0ailale to

"a3 the ore iediatel3 "a3ale liailities. ith reference to current assets) the results are not significantl3

affected since onl3 in0entories are not considered here. Initiall3) the >uic: ratio for I;I;I and


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4#2#2 Ret8rn on net "orth5 analysis and insi9hts

his ratio easures the rate of return on net worth?s in0estent. his is considered as the ost i"ortantfinancial ratio as this has soething to do with the return on shareholder?s e>uit3. As a rule of thu) the higher

the R&N) the etter is the fir?s financial "erforance. In this stud3) 2*1% is a great 3ear for Ais an:?sshareholders since the R&N rose to $.% in 2*1% fro (.6 in 2*1+. he R&N for I;I;I and Federal an:s has

risen in the siilar wa3. &0erall)


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4#2#4 rice earnin9 ratio5 analysis and insi9hts

his ratio shows how uch in0estors are willing to "a3 "er "eso of re"orted "rofits. he "rice earning ratio for

Federal has alwa3s een growing fro 1+.( to 2%.6 fro 2*1* to 2*1+) hereas


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4#3 Activity Ratio4#3#1 'etor t8rnover ratio5 analysis and insi9htshe detor turno0er ratio hel"s gauge the li>uidit3 of accounts recei0ale) the ailit3 of the fir to collect fro

custoers. It a3 also "ro0ide inforation aout a fir?s credit "olicies. For instance) it is increasing o0er tie

or is higher than the industr3 a0erage) the fir?s credit "olicies could e too lenient and accounts recei0ale not

sufficientl3 li>uid. All an:s ha0e alost sae detor turno0er ratio in 2*11 and in 2*1% also. So) all an:s ha0e

een using their assets 0er3 efficientl3 in etending its credit as well as collecting dets.

4#3#2 orkin9 capital ratio5 analysis and insi9htsor:ing ca"ital ratio has een used to find out the running or da3 to da3 financial acti0ities. ,3 used this ratio)

one can easil3 find the re>uired aount and onetar3 fund to eet the funds. he wor:ing ca"ital turno0er in

the 3ear 2*11 was highest for federal at *.96 followed 3


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'ol.() No.19) 2*1%

16%

4#4 Assets t8rnover ratio

4#4#1 %otal assets t8rnover5 analysis and insi9htsenerall3) the higher this ratio is the ore effecti0e. In other words) this ratio indicates the effecti0eness of using

total assets to generate re0enues. Siilar to the "re0ious financial ratio) as a rule of thu) to e considered

effecti0e) it should e at least *.+* ties. Dsing this) it can e said that all four firs :ee" an effecti0e

echanis on utili=ing their total assets. In the 3ear 2*11Ais had the asset turno0er of *.*$1 followed 3


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'ol.() No.19) 2*1%

16(

4#uidit3)

o"erating efficienc3) ca"ital structure and long-ter sol0enc3) and "rofitailit3) it is hel"ful to co"lete the

e0aluation of a fir 3 considering the interrelationshi" aong the indi0idual ratios.


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'ol.() No.19) 2*1%

166

Concl8sionAfter conducting a co"rehensi0e financial ratio anal3sis of the ao0e four an:s) the following conclusions are

ade5 If li>uidit3 ratios of all the co"anies are co"ared then it is found that onl3 Federal an: has the ideal

current ratio of 251.


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'ol.() No.19) 2*1%

167

Gasher) .R.) 2**(. !ractical Financial 8anageent. %th 4dn.) South-estern ;ollege !u.) DSA.)

IS,N-1*5 *+2%26*76$) ""5 7$%.

Gerac:)


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