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8/8/2019 Habib Bank Limeted

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HABIB BANK LIMETED

RATIO ANALYSIS OF FIVE YEARS 2005-2009

APPENDIX A-1


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CURRENT RATIO

=

The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities

(debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio,

the more capable the company is of paying its obligations. A ratio under 1 suggests that the

company would be unable to pay off its obligations if they came due at that point. While this shows the

company is not in good financial health, it does not necessarily mean that it will go bankrupt - as there are

many ways to access financing - but it is definitely not a good sign.

2005 =

= 1.13

2006 =

= 1.19

2007 =

= 1.18

2008 =

= 1.14

2009 =

= 1.15


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SALES TO WORKING CAPITAL RATIO =

What this ratio tries to highlight is how effectively working capital is being used in terms of the

turnover it can help to generate: no ideal values here but the higher the better, surely.

2005 =

= 0.51

2006 =

= 0.45

2007 =

= 0.48

2008 =

= 0.70

2009 =

= 0.66


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TIME INTREST EARNED RATIO =

A metric used to measure a company's ability to meet its debt obligations. It is calculated by taking a

company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds

and other contractual debt. It is usually quoted as a ratio and indicates how many times a company cancover its interest charges on a pretax basis. Failing to meet these obligations could force a company into

bankruptcy.

2005 =

= 5.30

2006 =

= 3.73

2007 =

= 2.42

2008 =

= 2.02

2009 =

= 1.91


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DEBT RATIO =

A debt ratio of greater than 1 indicates that a company has more debt than assets, meanwhile, a debt

ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other

measures of financial health, the debt ratio can help investors determine a company's level of risk.

2005 =

= 0.92

2006 =

= 0.91

2007 =

= 0.92

2008 =

= 0.91

2009 =

= 0.90


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CURRENT WORTH TO NET WORTH RATIO =

It compares the working capital with net assets of the company.

2005 =

= 1.54

2006 =

= 1.78

2007 =

= 1.65

2008 =

= 1.36

2009 =

= 1.36


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Working Capital.

Working Capital is more a measure of cash flow than a ratio. The result of this

calculation must be a positive number. It is calculated as shown below:

Working Capital = Total Current Assets - Total Current Liabilities

Bankers look at Net Working Capital over time to determine a company's ability toweather financial crises. Loans are often tied to minimum working capitalrequirements.

2005 = = 62383030

2006 = = 95155274

2007 = = 104938111

2008 = = 90286577

2009 = = 115152244


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TOTAL CAPITALIZATION RATIO =

A variation of the traditional debt-to-equity ratio, this value computes the proportion of a company's long-

term debt compared to its available capital. By using this ratio, investors can identify the amount of

leverage utilized by a specific company and compare it to others to help analyze the company's riskexposure. Generally, companies that finance a greater portion of their capital via debt are considered

riskier than those with lower leverage ratios.

2005 =

= 0.52

2006 =

= 0.55

2007 =

= 0.53

2008 =

= 0.44

2009 =

= 0.43


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LONG TERM ASSETS VS LONG TERM DEBT =

2005 =

= 0.37

2006 =

= 0.26

2007 =

= 0.32

2008 =

= 0.52

2009 =

= 0.45


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NET PROFIT MARGIN RATIO =

Indicates what portion of sales contribute to the income of a company.

2005 =

*100 = 29.82%

2006 =

*100 = 19.97%

2007 =

*100 = 29.07%

2008 =

*100 = 17.14%

2009 =

*100 = 17.61%


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RETURN ON ASSETS =

Where asset turnover tells an investor the total sales for each $1 of assets, return on assets, or ROA forshort, tells an investor how much profit a company generated for each $1 in assets. The return on assetsfigure is also a sure-fire way to gauge the asset intensity of a business.

2005 =

= 0.01

2006 =

= 0.02

2007 =

= 0.01

2008 =

= 0.01

2009 =

= 0.01


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RETURN ON EQUITY =

*100

The amount of net income returned as a percentage of shareholders equity. Return on equity measures a

corporation's profitability by revealing how much profit a company generates with the money shareholders

have invested.

2005 =

*100 = 30.16%

2006 =

*100 = 28.11%

2007 =

*100 = 19.36%

2008 =

*100 = 17.19%

2009 =

*100 = 17.83%


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RETURN ON OPERATING ASSETS =

*100

The return on operating assetsmeasure only includes in the denominator those assets actively used to

create revenue. This focuses management attention on the amount of assets actually required to run the

business, so that it has a theoretical targeted asset level to achieve. A typical result of this measurement is an

ongoing campaign to eliminate unnecessary assets.

2005 =

*100 = 12.68%

2006 =

*100 = 13.47%

2007 =

*100 = 10.47%

2008 =

*100 = 9.81%

2009 =

*100 = 9.78%


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OPERATING ASSET TURNOVER =

*100

Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher

the number the better. It also indicates pricing strategy: companies with low profit margins tend to have

high asset turnover, while those with high profit margins have low asset turnover.

2005 =

*100 = 42.53%

2006 =

*100 = 46.36%

2007 =

*100 = 52.42%

2008 =

*100 = 57.27%

2009 =

*100 = 55.54%


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Return on Assets Du Pont

is a financial ratio that shows how the return on assets depends on both asset turnover and profit margin.

The Du Pont method breaks out these two components from the return on assets ratio in order to

determine the impact of each on the profitability of the company.

Return on assets Du Pont can be expressed as:

ROA Du Pont = (Net income / Sales) x (Sales / Total Assets)

2005 = = 1.78%

2006 = = 2.03%

2007 = = 1.47%

2008 = = 1.37%

2009 = = 1.54%


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TOTAL ASSET TURNOVER =

Net sales divided by total assets. This is a measure of how well assets are being used to

produce revenue. also called asset turnover.

2005 =

= 0.06

2006 =

= 0.07

2007 =

= 0.074

2008 =

= 0.08

2009 =

= 0.088


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SALES TO FIXED ASSETS =

A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a

company's ability to generate net sales from fixed-asset investments - specifically property,

plant and equipment (PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows that

the company has been more effective in using the investment in fixed assets to generate

revenues.

2005 =

= 2.89

2006 =

= 3.65

2007 =

= 3.66

2008 =

= 4.29

2009 =

= 4.53


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DEBT TO EQUITY RATIO =

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders'

equity. It indicates what proportion of equity and debt the company is using to finance its assets.

2005 =

= 15.24

2006 =

= 11.96

2007 =

= 12.07

2008 =

= 10.81

2009 =

= 10.37


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OPERATING CASHFLOW TO DEBT RATIO =

This coverage ratio compares a company's operating cash flow to its total debt, which, for

purposes of this ratio, is defined as the sum of short-term borrowings, the current portion of

long-term debt and long-term debt. This ratio provides an indication of a company's ability tocover total debt with its yearly cash flow from operations. The higher the percentage ratio, the

better the company's ability to carry its total debt.

2005 =

= -

2006 =

= 0.03

2007 =

= 0.01

2008 =

= -

2009 =

= 0.13


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OPERATING CASHFLOW PER SHARE =

Many analysts, as well as some of the greatest investors of all time, place more weight on cash

flow per share than earnings per share. Because EPS is more easily manipulated, its reliability

can at times be questionable. Cash, on the other hand, is difficult - if not impossible - to fake.You either have cash or you don't. Therefore, cash flow per share is a useful measure for the

strength of a firm and the sustainability of its business model

2005 =

= -

2006 =

= 2.58

2007 =

= 1.41

2008 =

= -

2009 =

= 11.83


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DIVEDEND PER SHARE =

Dividends are a form of profit distribution to the shareholder. Having a growing dividend per share can

be a sign that the company's management believes that the growth can be sustained.

2005 =

= 0.05

2006 =

= 0.10

2007 =

= 0.20

2008 =

= 0.35

2009 =

= 0.45


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EARNING PER SHARE =

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per

share serves as an indicator of a company's profitability.

2005 =

= 1.39

2006 =

= 1.84

2007 =

= 1.46

2008 = = 1.43

2009 =

= 1.47


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DIVIDEND PAY OUT RATIO =

The payout ratio provides an idea of how well earnings support the dividend payments.More mature

companies tend to have a higher payout ratio

2005 =

= 0.03

2006 =

= 0.05

2007 =

= 0.13

2008 =

= 0.24

2009 =

= 0.30


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BOOK VALUE PER SHARE =

Somewhat similar to the earnings per share, but it relates the stockholder's equity to the number

of shares outstanding, giving the shares a raw value.

2005 =

= 4.64

2006 =

= 6.54

2007 =

= 7.54

2008 =

= 8.32

2009 =

= 8.24

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