Balance Sheet Analysis of HBL as at Dec.

31, 2004

Balance sheet Analysis :

Ratios
Liquidity Ratios Current Ratio C.R = Current Asset/Current Liability = 19,716,285/18,990,089 = 1.03 Current ratio of 2 is acceptable for manufacturing concern but 1 is also acceptable for bank or any corporation dealing with the bank. Quick ratio Q.R = C.A Inventory / C.L = 19,716,285/18,990,089 = 1.03 1 or more is considered as good.. As liquidity ratios shows the ability to satisfy short term obligations as they come due. So, it is more than 1. Hence Good. Bank can pay off its short term obligations. Debt Ratio D.R = T.L / T.A = 18,990,089/19,716,285 = 0.963 Mean 96.3% As debt ratio measures the proportion of assets financed by firms creditors. Higher the ratio greater will be the amount of others peoples money being used to generate profits.. Here it mean, bank has financed 96% of assets with debt which is not a good sign. As, higher the ratio, greater the firms degree of indebtness and the more financial leverage.