Banking Ratio Financial Statement Analysis

National Bank of Pakistan is a Pakistani government-owned commercial bank which is a subsidiary

of State Bank of Pakistan. It is headquartered in Karachi, Pakistan. As of March 2017, it has 1,450
branches across Pakistan with assets of approximately USD 17.2 billion

Financial statement
analysis is a process of
analyzing the relationship
among the financial
statements
and their items. It is a
valuable tool used by the
investors and creditors,
financial analyst and
other in
their decision making
processes related to
stocks, bonds and other
financial institutions. The
goal is
to assess past
performance and current
financial position and to
make predictions about
the future
performance of the
company.
Financial statement analysis is a process of analyzing the relationship among the financial
statements and their items. It is a valuable tool used by the investors and creditors, financial analyst
and other in their decision making processes related to stocks, bonds and other financial
institutions. The goal is to assess past performance and current financial position and to make
predictions about the future performance of the company.

Efficiency ratios

The spread ratio is over all fine compared to the other ratios

Current ratio shows

firm’s ability to cover its
short term liabilities. It is
the ratio of current
assets to
current liabilities. Higher
the ratio greater will be
the ability of organization
to pay current liabilities
Current ratio shows firm’s ability to cover its short term liabilities. It is the ratio of current assets to
current liabilities. Higher the ratio greater will be the ability of organization to pay current liabilities.
Liquidity Ratio

Capital Adequacy Ratio is also known as Capital to Risk Assets Ratio, is the ratio of a bank's capital
to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount
of loss and complies with statutory Capital requirements. It is a measure of a bank's capital.
Deposits to Total Assets

Its over all reliability on its assets is high because they are doing financially well and not proving to a
burden to ,gross advances to deposits are good enough for them they are doing rpetty well in this
case.The average in this region is thr same as the over all industry. Debt ratio shows leverage in the
company. High percentage means company has high leverage. Low means low leverage. NBP has
very high leverage. NBP has high debt ratio that shows that high rate of funds are obtained from the
creditors. It means it has high risk of default. Invertors do not like to invest in high risk companies.
NBP should try to lessen his amount of debt.
Asset Quality ratio

Being a government bank the problem with the governments banks is that they are more liable on
other banks and also people that are taking charge on forces that are yet not able to fulfill the
accountability they have on themselves making it hard for it hard for NBP to work to its
fullest,advances have been taken by the bank but are in line with what banks offer in public bank

Capital Ratio

Capital Adequacy Ratio is also known as Capital to Risk Assets Ratio, is the ratio of a bank's capital
to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount
of loss and complies with statutory Capital requirements. It is a measure of a bank's capital.

Everything else seems normal but the break up per value share has been high for NBP because it is
a state bank however its working in the precise manner of a leverage ratio. much portion is financed
by the equity. It is cushioning for investor’s against their investment. They prefer high ratio.
NBP has very low ratio. It will lessen the interest of the investors. NBP should try to increase its
equity. Equity position is slightly better in 2017. Low equity ratio indicates high use of debt. This is
the ratio of net profit after taxes to net sales. This is used to measure the overall profitability of the
company and is very useful to proprietors. The profit margin tells you how much profit a company
makes for every Rupee 1 it generates in revenue. The ratio is very useful , the firm shall not be able
to achieve a satisfactory return on its investment. This ratio also indicates the firm’s capacity to
face adverse economic conditions such as price competition, low demanding. Higher the ratio
the better is the profitability. This is the measurement of the return which shareholders are
obtaining on their investments. The ratio is the relationship of net income and total equity of the
shareholders.But NBP’s current position is very poor as compared to last two year
because its decreasing yearly ratio calculate the income earned by the company against
sale and in second portion the calculation of sales to total assets is measured. The
multiplication of both the answers provides us the how much the company is earning in relation to
total assets. Ratio is very low that indicates the utilization of the assets is very poor.

Cash Flow Ratio

The cash flow statement is one of the three financial statements a business owner uses in cash flow
analysis. Businesses rely on the statement of cash flows to determine their financial strength. Cash
flow is the driving force behind the operations of a business.

A cash flow analysis uses ratios that focus on the company's cash flow. It consists most commonly
of the price to cash flow ratio, cash flow coverage ratio, and cash flow margin ratio.It shows that the
ratio is dependenton credit that indicates a unhealthy financial statement shown.