Liquidity Ratios:

Definition: In accounting, the term liquidity is defined as the ability of a company

to meet its financial obligations as they come due. The liquidity ratio, then, is a
computation that is used to measure a company's ability to pay its short-term
debts. ... It is followed by the acid ratio, and the cash ratio.
Formula: Current Ratio = Current Assets / Current Liabilities

Current Ratio Year 2018

AB Bank Limited 1.05
249185305270 235383290846

SIBL Bank Ltd. 237854170953 9.59

247950776574

Comment: AB Bank current ratios are good enough because it maintains more
than 1tk current assets against 1tk current liabilities. But SIBL have higher current
ratios than AB. So, SIBL have negative discrepancy here.
Formula: Quick Ratio = Liquid Assets / Current Liabilities

Quick Ratio Year 2018

AB Bank Limited 16433155519 0.06

235383290846

SIBL Bank Ltd. 0.009

2344325541
2479507766574

Comment: Here, the standard ratio is 1:1. Companies with ratios less than 1 can’t
pay their current liabilities and should be locked with extreme caution. The quick
ratios of SIBL bank is poor than the AB bank. Although none of the banks have
satisfactory quick ratios here, but among them SIBL have the lowest ratio. So, SIBL
have negative discrepancy here.
Activity Ratios:
Definition: Activity ratios are a category of financial ratios that measure a firm's
ability to convert different accounts within its balance sheets into cash or sales. ...
Activity ratios are also commonly known as efficiency ratios.
Formula: Total Assets Turnover = Sales / Total Asset

Total Assets Turnover Year 2018

AB Bank Limited 0.06
19810850595
325153823673
SIBL Bank Ltd. 25073045000 0.08
307402855311

Comment: The higher the firm’s total asset turnover ratios, the more efficiently
its assets have been used. As SIBL have higher ratio than AB bank there is a
positive discrepancy. As, AB bank have lower ratio than SIBL here exists a negative
discrepancy.
Total Asset
Formula: Fixed Assets Turnover = Sales / Net Fixed Asset

Fixed Assets Turnover Year 2018

AB Bank Limited 4.44
19810850595
4453456276
SIBL Bank Ltd. 7.01
2507304500 3572253103

Comment:
Debt Ratios:
Definition: The debt ratio is a financial ratio that measures the extent of a
company's leverage. The debt ratio is defined as the ratio of total debt to total
assets, expressed as a decimal or percentage. ... In other words, the company has
more liabilities than assets.
Formula: Debt Ratio = Total Liabilities / Total Asset or Total Debt / Total Asset

Debt Ratio Year 2018

AB Bank Limited 301258062768 0.92
325153823673

SIBL Bank Ltd. 291615483993 0.94

307402855311

Comment: Here debt ratios of AB bank are sometimes higher than SIBL.As debt
ratio indicates the amount of creditors fund used in assets, higher ratios indicates
negative discrepancy and lower ratios indicate positive discrepancy.
Profitability Ratios:
Definition: A profitability ratio is a measure of profitability, which is a way to
measure a company's performance. Profitability is simply the capacity to make a
profit, and a profit is what is left over from income earned after you have
deducted all costs and expenses related to earning the income.
Formula: Return on Equity Capital (ROE) = (Earnings available to common
stockholders / Equity share capital) × 100

Return on Equity Capital Year 2018

AB Bank Limited 0.08%

SIBL Bank Ltd. 10.05%

Comment: ROE is the measurement of rate of return flowing to the bank’s

shareholders. It measures the net benefit that the shareholders have received
from investing their capital in the bank. The higher ratio indicates the bank is
efficient in generating income on new investment. Here SIBL’s ROE is higher than
AB bank. So with compared to AB bank, SIBL’s ROE is better. So there exists
positive discrepancy.

Formula: Return on Assets (ROA) = Earnings available to common stockholders /

Total Asset × 100

Return on Assets Year 2018

AB Bank Limited 0.01%

SIBL Bank Ltd. 6.02%

Comment: ROA is an indicator of managerial efficiency; indicate the capability of
management in converting firm’s asset into net earnings.In recent years SIBL’s
ROA is better than AB bank. So, here exists positive discrepancy.