Interpretation and evaluation

Of the ratio analysis of

People’s Insurance Company

(PICL)

Liquidity Ratios

Current ratio

2017 2018
2.42 2.19

Current Ratio
2.45

2.4

2.35

2.3
Current Ratio
2.25

2.2

2.15

2.1

2.05
2017 2018

This ratio helps us determine whether or not PICL can pay their short term debts with their
available short time assets. As evident that for every taka of current liability, PICL has 2.42 BDT,
therefore portraying that they do have enough assets and are doing a great job. There is a
significant drop in the ratio in 2018 as evident by the graph, which stems from a
proportionately greater rise in the liabilities than there is in the current assets. Although
nothing alarming, it is advised that the company try to raise the ratio, as a constant drop may
create liquidity hassles for them.
Loss Ratio

2017 2018
0.238302237 0.39258754

Loss Ratio
0.45

0.4

0.35

0.3

0.25 Loss Ratio

0.2

0.15

0.1

0.05

0
2017 2018

This ratio helps us comprehend whether or not the insurance firm is collecting enough premium
to cover up for its claims. It is also one of the greatest indicators of an insurance firm’s
performance. The figures tell us that their efficiency in managing their claims or losses has
almost doubled in a year and is a reflection of PICL collecting their premiums effectively. Once
broken down, these figures can be deciphered as a result of a decent rise in the amount of
premiums collected, as a response to the significant increase in claims.
Expense Ratio

2017 2018
0.053384781 0.049158709

Expense Ratio
0.05

0.05

0.05

0.05 Expense Ratio

0.05

0.05

0.05

0.05
2017 2018

These numbers help us to understand what percentage of the funds go to paying for
management fees as the insurance funds are expensive to maintain and requires a highly skilled
professional and extensive research.

The fall in numbers are a positive sign for the company as it implies that the firm as become
more efficient in their management. In other words, a decreasing amount of expenses are
required to maintain the same amount of assets than the previous year.

Although this is not a significant change when the graph is translated to numbers, the
breakdown of the values show an impressive change within the firm, with lowered
underwriting costs and an increase in net premiums collected.
 Efficiency Ratios
Operating Efficiency Ratio

2017 2018
0.4632275719 0.4495596206

Operating Efficiency
0.47

0.46

0.46
Operating Efficiency

0.45

0.45

0.44
2017 2018

The operating efficiency of a firm denotes their ability to proive their services in the most cost-
effective manner. Previously in 2017, approximately 46.3% of scheme sales were operating
expenses, which in the following year of 2018 fell to 44.9%.

A fall in numbers is preferred here, as it implies that their expenses as a percentage of sales of
insurance schemes has fallen.

Despite the positive results, the breakdown of the numbers has a negative side which portrays
a significant rise in the operating expenses. Thankfully this is matched with a rise in operating
revenues as well, but it is advised that their expenses do not rise at such a steep rate.
Tax Management Efficiency

2017 2018
0.1501965569 0.0840410639

Tax Management Efficiency

0.16

0.14

0.12

0.1
Tax Management Efficiency
0.08

0.06

0.04

0.02

0
2017 2018

The tax management efficiency helps us understand what portion of their operating income
helps generate net income after tax. PICL has seen staggering fall in their tax manageent
efficency indicating inefficient use of their operating income. The numbers have fallen by a half
almost. This is due to the fact that PICL has witnessed an impressive rise in their operating
income before tax yet a great reduction in overall net income after tax.
Expense Control Efficiency

2017 2018
6.00155314 5.807588076

Expense Control Efficiency

6.05

5.95

5.9 Expense Control Efficiency

5.85

5.8

5.75

5.7
2017 2018

An expense control efficiency implies exactly what the name says, and it is preferred that PICL
generate a higher value for this ratio as it increases the overall income post taxation. As evident
by the tax management efficiency ratios, the expense control ratio has seen declining numbers
as a significant proportion of their operating income goes to covering their increasing expenses.
Employee Productivity Ratio

2017 2018
0.423855799 0.451376147

Employee Productivity
0.46
0.45
0.45
0.44
0.44
Employee Productivity
0.43
0.43
0.42
0.42
0.41
0.41
2017 2018

This ratio helps PICL to determine the volume of income generation by employees and how
productive their firms are in terms of employees. The benefit of this can be seen mostly in the
long run as it helps them with human resource management and predictive modelling such as
pro-forma statements. The increase in employee productivity over the year is a plus point for
them as it implies increased productivity.

Asset Utilization
 2017 2018
0.065976373 0.066682931

Asset Utilization
0.07

0.07

0.07

0.07

0.07 Asset Utilization

0.07

0.07

0.06

0.06

0.06
2017 2018

This ratio helps us to comprehend how efficiently PICL can use their assets to generate
operating income. The rise in value from 2017 to 2018 denotes an increased efficiency in using
their assets to generate their operating income. The significant increase and investment in
assets has been truly beneficiary to the company. This being said, the assets have seen a
proportionately greater rise, in comparison to the operating income, hence we may conclude
that there is space for increased efficiency.

Profitability Ratios
Investment Yield Ratio

2017 2018
3.117465224 0.867312073

Investment Yield
3.5

2.5

2 Investment Yield

1.5

0.5

0
2017 2018

This ratio shows the returns that PICL recieves on the investment in their assets. The
investment yield has dropped by almost half, indicating unworthy investment decisions.
Although 2018 proved significantly better in terms of the ratio of investment-investment
income, 2017 was a bad only managed to generate an income of just over a quarter of the
amount of expenses. On the other hand, we may simply assume that the yield has fallen due to
less riskier investments, hence a lower yield.

Return On Assets
 2017 2018
0.059471935 0.03254633

ROA
0.07

0.06

0.05

0.04 ROA

0.03

0.02

0.01

0
2017 2018

The ROA conveys the proportion of the income that is generated by the firm’s assets. In other
words, these figures tell us how effectively PICL can convert the money they have used to
purchase their assets, into profit. It is to be notes that the value of total assets have been taken
into consideration and not the cost of acquiring them, hence interest expense has not been
added into the figures. The decreasing return from 2017 to 2018 is not favorable as it indicates
an inefficient management of assets that could help generate more income. When broken
down, the figures are a reflection of the significant increase in total assets but an overall
decrease in the net income post taxation. This is furthermore, an emphasis on the inefficient
tax management as well as inefficient expense control.

Return On Equity
 2017 2018
0.104194985 0.060268884

ROE
0.12

0.1

0.08
ROE
0.06

0.04

0.02

0
2017 2018

This ratio shows how well PICL can generate profit from the shareholder’s investments. It is also
an indicator of how effectively the management of PICL makes use of their equity funds to
finance the operations and growth of the company. The decrease in the ratio over the span of
the year translates into an inefficient use of the investor’s funds. This interpretation is backed
up by the fact that there is a fall in net income after tax, despite the observed increase in
stockholder’s equity.

Leverage Ratio
Debt Ratio

2017 2018
0.42934658 0.459976688

Debt Ratio
0.47

0.46

0.45
Debt Ratio
0.44

0.43

0.42

0.41
2017 2018

This ratio shows PICL’s ability to pay off their liabilities with their assets. It also helps investors
and creditors analyze the net debt burden on the company as well as the firm’s ability to pay off
the debt in the future as well as in potential uncertain economic times. Although, industry
standard wise, the ratios compute a favorable figure, the increase in the ratio over the year is
unfavorable. It implies that a greater percentage of assets need to be sold off in order to pay for
liabilities. This increase may be a cause of concern for creditors as well as investors.

Debt-Equity Ratio

2017 2018
 0.752216323 0.851779036

Debt-Equity Ratio
0.86

0.84

0.82

0.8
Debt-Equity Ratio
0.78

0.76

0.74

0.72

0.7
2017 2018

The debt to equity figures portray the percentage of debts that are financed by creditors and
investors. The rise in ratio imply that creditors have funded more operations than investors.
This is not preferred as unlike equity financing, debt financing must be repaid to the creditor or
banks. As debt financing also requires interest payments, debt financing is tougher than equity
financing and is therefore risky in the eyes of the creditors. When broken down, we can see
that the reason of this increase in ratio is due to the proportionately greater rise in total
liabilitis in the year of 2018.

Earnings Ratios
Earnings Per Share
 2017 2018
2.638095238 1.559307359

EPS
3

2.5

2
EPS
1.5

0.5

0
2017 2018

Also known as the net income per share, this ratio shows the amount of money each share
would receive if all profits were distributed as dividends at the end of the financial year. A
decrease in the ratio figures imply a decrease in profitability as over the year, the company has
less to offer to the shareholders. Although, not the most significant ratio to investors, an
increase in EPS may result in an increase in stock prices, hence is favorable. The fall in numbers
is a consequence of the fall in net income after taxes.

Market/Book Ratio

2017 2018
 1.96 1.58

M/B Ratio
2.5

1.5
M/B Ratio

0.5

0
2017 2018

This financial valuation tool helps us determine whether the stock price of PICL is overvalued or
undervalued. It helps potential investors to differentiate between investor speculation and the
true value of the shares. Although the ratios give out desirable figures in both years, indicating
overvaluation and that investors are willing to pay more than the assets are actually worth,
there is a decrease in trend over the span of the year. Despite this, investors will be unable to
make a profit by selling outstanding shares as the cumilative stock prices are worth more than
the assets of the company, indicating decent profit projections in the future.

Dividend Yield
 2017 2018
0.06122449 0.063291139

Dividend Yield
0.06

0.06

0.06

0.06 Dividend Yield

0.06

0.06

0.06

0.06
2017 2018

Investors may use this financial ratio to analyze their returns on investments in the shares. It
computes the amount of cash dividends distributed to common shareholders in relaton to the
market value per share. The increase in dividend yield indicates that PICL pays a good dividend
compared to the average market value of stocks, referring to high compensations for the
investments.

Dividend Payouts
 2017 2018
0.454873646 0.641310383

Dividend Payouts
0.7

0.6

0.5

0.4 Dividend Payouts

0.3

0.2

0.1

0
2017 2018

This ratio shows the percentage of net income that PICL pays out as dividends. It also helps to
decipher what proportion of income the company keeps as retained earnings in order to fund
their operations. A consistant trend is preferred as opposed to a high ratio. In this instance, we
witness a raise in the ratio, indicating good operations-evident by rise in operating income and
therefore may also be the reason of an overall decrease in the net income as they chose to pay
out more dividends for the year of 2018.

Interpretation and evaluation

 Of the ratio analysis of

Pragati Insurance

Liquidity Ratios

Current ratio

2017 2018
0.232817857 0.242297329

Current Ratio
0.24

0.24

0.24

0.24

0.23 Current Ratio

0.23

0.23

0.23

0.23

0.22
2017 2018

This ratio helps us determine whether or not PIL can pay their short term debts with their
available short time assets. It is a crucial measure of liquidity to businesses as short term
liabilities are due within a year, and therefore the business must have on hand liquid assets.
The rise in current ratio over the year is preferred as it implies their ability to repay short term
debts have increased, due to an increase in current assets.

Loss Ratio
 2017 2018
0.117421762 0.144024965

Loss Ratio
0.16

0.14

0.12

0.1
Loss Ratio
0.08

0.06

0.04

0.02

0
2017 2018

This ratio helps us comprehend whether or not the insurance firm is collecting enough premium
to cover up for its claims. It is also one of the greatest indicators of an insurance firm’s
performance. The figures tell us that their efficiency in managing their claims or losses has
increased over the years. To do so, they have collected sufficient premiums.

Expense Ratio
 2017 2018
0.770524248 0.745371107

Expense Ratio
0.78
0.77
0.77
0.76
0.76
Expense Ratio
0.75
0.75
0.74
0.74
0.73
0.73
2017 2018

These numbers help us to understand what percentage of the funds go to paying for
management fees as the insurance funds are expensive to maintain and requires a highly skilled
professional and extensive research. A decrase in the figures are desirable to the business as it
implies that lower costs are being incurred to manage the a specific amount of funds than the
previous year.

Efficiency Ratios
Operating Efficiency

2017 2018
52.13341845 58.2357264

Operating Efficiency
59
58
57
56
55
Operating Efficiency
54
53
52
51
50
49
2017 2018

The operating efficiency of a firm denotes their ability to proive their services in the most cost-
effective manner. An increase in operating efficiency values is not preferred as it implies a
decrease in efficiency by PIL. This is due to a significant increase in the operating expenses
followed by a proportionaly smaller rise in the net income.

Tax Management Effieciency

 2017 2018
0.0913292215 0.0863839775

Tax Management Efficiency

0.09

0.09

0.09

0.09

0.09 Tax Management Efficiency

0.09

0.09

0.09

0.08

0.08
2017 2018

The tax management efficiency helps us understand what portion of their operating income
helps generate net income after tax. The fall in numbers is not preferable it means a smaller
percentage of the operating income is being used to generate net income. This indicates
inefficiency of tax management within the company.

Expense Control Efficiency

 2017 2018
54.28566869 60.57066139

Expense Control Efficiency

62

60

58
Expense Control Efficiency
56

54

52

50
2017 2018

An expense control efficiency implies exactly what the name says, and the increase in
expense control efficiency is beneficial to PIL. The increase can be interpreted as
occuring due to the increase in net income before taxes. The NOIBT has increased by
almost 50% over the span of the year.

Asset Utilization
 2017 2018
0.007268147 0.007782409

Asset Utilization
0.01

0.01

0.01

0.01

0.01 Asset Utilization

0.01

0.01

0.01

0.01

0.01
2017 2018

This ratio helps us to comprehend how efficiently PIL can use their assets to generate
operating income. The increase in numbers indicates an efficiency of PIL in using their
assets and therefore in 2018, the rise in assets succesfully translate into increased value
of assets generating an increased net income.

Profitabiliity Ratios
Investment Yield

2017 2018
1.103185925 1.087316522

Investment Yield
1.11

1.1

1.1

1.09
Investment Yield
1.09

1.08

1.08

1.07

1.07
2017 2018

This ratio shows the returns that PIL recieves on the investment in their assets. It is a
profitability ratio which is seen declining for Pragati Insurance in between the years of
2017 to 2018, indicating decreasing returns on their investments, which in turn means
bad investment decisions made in 2018. Although there was a rise in the return, there
was a greater percentage increase in the investment expenses.

Net Profit Margin

 2017 2018
1.320945659 1.469672912

Net Profit Margin

1.42

1.4

1.38

1.36

1.34 Net Profit Margin

1.32

1.3

1.28

1.26

1.24
2017 2018

This is a profitability ratio that  measures the percentage of each taka earned by PIL
that ends up as net profit at the end of the year. In other words, it shows how much net
income they makes from each taka of sales. The increase in npm indicates an increase in
the firm’s profitability, which is commendable as they managed to achieve this, despite
their increase in expenses.

Return On Assets
 2017 2018
0.03603451 0.04072017

ROA
0.05

0.04

0.04

0.03

0.03 ROA

0.02

0.02

0.01

0.01

0
2017 2018

The ROA conveys the proportion of the income that is generated by the firm’s assets. In
other words, these figures tell us how effectively PIL can convert the money they have
used to purchase their assets, into profit. It is to be notes that the value of total assets
have been taken into consideration and not the cost of acquiring them, hence interest
expense has not been added into the figures. The rise in the ROA means that PIL has
efficiently used their assets to generate a greater return.

Return On Equity
 2017 2018
0.048785007 0.056927945

ROE
0.06

0.05

0.04
ROE
0.03

0.02

0.01

0
2017 2018

This ratio shows how well PIL can generate profit from the shareholder’s investments. It
is also an indicator of how effectively the management of PICL makes use of their equity
funds to finance the operations and growth of the company. The rise in ROE indicates
that their efficiency in generating profit using the investments has improved over the
span of those two years, which is a positive sign for potential and current shareholders.

Leverage Ratios
Debt Ratio
2017 2018
0.261358654 0.288993984

Debt Ratio
0.29

0.28

0.28

0.27 Debt Ratio

0.27

0.26

0.26

0.25
2017 2018

This ratio shows PIL’s ability to pay off their liabilities with their assets. It also helps
investors and creditors analyze the net debt burden on the company as well as the
firm’s ability to pay off the debt in the future as well as in potential uncertain economic
times. The increase in the figures implies increasing instability over the span of the two
years as it implies that overall debts have increased.

Debt-Equity Ratio
 2017 2018
0.353838133 0.404021735

Debt-Equity
0.41

0.4

0.39

0.38

0.37 Debt-Equity

0.36

0.35

0.34

0.33

0.32
2017 2018

The debt to equity figures portray the percentage of debts that are financed by creditors
and investors. The rise in ratio imply that creditors have funded more operations than
investors. This is not preferred as unlike equity financing, debt financing must be repaid
to the creditor or banks. As debt financing also requires interest payments, debt
financing is tougher than equity financing and is therefore risky in the eyes of the
creditors. When broken down, we can see that the reason of this increase in ratio is due
to the proportionately greater rise in total liabilitis in the year of 2018.

Earnings Ratios
Times Interest Earned

2017 2018
52.06188119 23.28937008

Times Interest Earned

60

50

40
Times Interest Earned
30

20

10

0
2017 2018

Also known as the interest coverage ratio, measures the amount of income that can be
used to cover interest expenses in the future. The ratio indicates how many times PIL
could pay their interest expenses with its ‘before tax income’, and therefore a larger
number is considered more favorable than smaller ones. But in this case the numbers
have declined over the span of two years. This indicates an increase in credit risk.

Earnings Per Share

2017 2018
 2.534344918 3.020394844

EPS
3.1

2.9

2.8

2.7 EPS

2.6

2.5

2.4

2.3

2.2
2017 2018

Also known as the net income per share, this ratio shows the amount of money each
share would receive if all profits were distributed as dividends at the end of the financial
year. The increase in the EPS figures indicate an increase in profitabilty which is backed
up by previous computed figures such as the net profit margin. This is beneficial for PIL
as it means that it is welcoming for potential investors, as PIL has greater amount of
dividends to offer.

Dividend Yield
 2017 2018
0.032074157 0.039801

Dividend Yield
0.05

0.04

0.04

0.03

0.03 Dividend Yield

0.02

0.02

0.01

0.01

0
2017 2018

Investors may use this financial ratio to analyze their returns on investments in the
shares. It computes the amount of cash dividends distributed to common shareholders
in relaton to the market value per share. As PIL experiences a higher dividend yield,
from 2017 to 2018, it indicates that they pay thei investors a larger dividend compared
to the fair market value of the stock. This means the investors are getting highly
compensated for their investments compared with lower dividend yielding stocks.

Dividend Payouts
 2017 2018
0.357947595 0.409950303

Dividend Payouts
0.41

0.4

0.39

0.38

0.37 Dividend Payouts

0.36

0.35

0.34

0.33

0.32
2017 2018

This ratio shows the percentage of net income that PIL pays out as dividends. It also
helps to decipher what proportion of income the company keeps as retained earnings in
order to fund their operations. A consistant trend is preferred as opposed to a high
ratio. This being said, an increasing dividend payout, by no means is a negative sign,
rather indicates that their profitability is stable.

Interpretation and evaluation

 Of the ratio analysis of

Bangladdesh General Life Insurance

Liquidity Ratios

Current ratio

2017 2018
3.043499496 2.426129041

Current Ratio
3.5

2.5

2 Current Ratio

1.5

0.5

0
2017 2018

This ratio helps us determine whether or not BGLI can pay their short term debts with
their available short time assets. The decrease in the current ratio over the span over
the two years implies that their ability to pay back short-term debts have decreased.
The root cause for this is the fall in current assets and significant rise in the current
liabilities.

Loss Ratio
 2017 2018
0.288367289 0.334113603

Loss Ratio
0.34

0.33

0.32

0.31
Loss Ratio
0.3

0.29

0.28

0.27

0.26
2017 2018

This ratio helps us comprehend whether or not the insurance firm is collecting enough
premium to cover up for its claims. It is also one of the greatest indicators of an
insurance firm’s performance. The rise in loss ratio figures tell us that their efficiency in
managing their claims or losses has increased over the years. To do so, they have
collected sufficient premiums.

Efficiency Ratios
Operating Efficiency

2017 2018
21.0339663 9.440756955

Operating Efficiency
25

20

15
Operating Efficiency

10

0
2017 2018

The operating efficiency of a firm denotes their ability to proive their services in the
most cost-effective manner. A fall in operating efficiency is preferred in normal
circumstances as it indicates that as it implies that their expenses as a percentage of
sales of insurance schemes has fallen. When broken down, we can decipher that the
root cause of this increased efficiency is due to increased operating revenues and a fall
in operating expenses.

Tax Management Effieciency

 2017 2018
0.0673407212 0.0778012227

Tax Management Efficiency

0.08

0.08

0.07

0.07
Tax Management Efficiency
0.07

0.07

0.07

0.06

0.06
2017 2018

The tax management efficiency helps us understand what portion of their operating
income helps generate net income after tax. BGLI has seen staggering rise in their tax
manageent efficency indicating efficient use of their operating income. This is due to the
fact that BGLI has witnessed a rise in their net income despite seeing a fall in NOIBT.

Expense Control Efficiency

2017 2018
 22.0345012 10.44089818

Expense Control Efficiency

25

20

15
Expense Control Efficiency

10

0
2017 2018

An expense control efficiency implies exactly what the name says and a decrease in
expense control efficiency is troublesome for BGLI. The drop in nmbers are is
significantly steep and indicates increased expenses as well as increased inefficiency
from the company management itself.

Asset Utilization
 2017 2018
0.021779398 0.04252623

Asset Utilization
0.05
0.05
0.04
0.04
0.03
Asset Utilization
0.03
0.02
0.02
0.01
0.01
0
2017 2018

This ratio helps us to comprehend how efficiently BGI can use their assets to generate
operating income. The rise in asset utilization has doubled over the two years indicating
efficient use of assets.

Profitabiliity Ratios
Investment Yield

2017 2018
0.585982012 0.375329468

Investment Yield
0.7

0.6

0.5

0.4 Investment Yield

0.3

0.2

0.1

0
2017 2018

This ratio shows the returns that BGI recieves on the investment in their assets. A fall in
investment yield indicates bad investment decisions, expenses and a proportionately
lower return on these investments. This being said, the ratio was low also due the
contribution of lower investment expenses, making this figure not so troublesome as
the graph or ratio independently suggest.

Net Profit Margin

2017 2018
 0.627530822 0.614792646

Net Profit Margin

0.62

0.62

0.62

0.62

0.61 Net Profit Margin

0.61

0.61

0.61

0.61

0.6
2017 2018

This is a profitability ratio that  measures the percentage of each taka earned by PIL
that ends up as net profit at the end of the year. In other words, it shows how much net
income they makes from each taka of sales. A fall in the net profit margin indicates
decreased profitability which has resulted from overall net income despite increased
sales of insurance schemes. This is an indication of increased expenses as evident by the
expense control ratio.

Return On Assets

2017 2018
 0.03231669 0.034544679

ROA
0.03

0.03

0.03

0.03 ROA

0.03

0.03

0.03

0.03
2017 2018

The ROA conveys the proportion of the income that is generated by the firm’s assets. In
other words, these figures tell us how effectively BGLI can convert the money they have
used to purchase their assets, into profit. It is to be notes that the value of total assets
have been taken into consideration and not the cost of acquiring them, hence interest
expense has not been added into the figures. The rise in the ROA means that PIL has
efficiently used their assets to generate a greater return.

Return On Equity
 2017 2018
0.051981149 0.054241124

ROE
0.05
0.05
0.05
0.05
0.05
ROE
0.05
0.05
0.05
0.05
0.05
0.05
2017 2018

This ratio shows how well BGI can generate profit from the shareholder’s investments. It
is also an indicator of how effectively the management of PICL makes use of their equity
funds to finance the operations and growth of the company. The rise in ROE indicates
that their efficiency in generating profit using the investments has improved over the
span of those two years, which is a positive sign for potential and current shareholders.

Leverage Ratios
Debt Ratio
2017 2018
0.378299821 0.363127519

Debt Ratio
0.37

0.37

0.37

0.37

0.36 Debt Ratio

0.36

0.36

0.36

0.36

0.35
2017 2018

This ratio shows BGLI’s ability to pay off their liabilities with their assets. It also helps
investors and creditors analyze the net debt burden on the company as well as the
firm’s ability to pay off the debt in the future as well as in potential uncertain economic
times. A fall in the debt ratio implies stability and potential of longevity because a
company with lower ratio also has lower overall debt.

Debt-Equity Ratio
 2017 2018
0.608492378 0.57017304

Debt-Equity
0.62

0.61

0.6

0.59 Debt-Equity

0.58

0.57

0.56

0.55
2017 2018

The debt to equity figures portray the percentage of debts that are financed by creditors
and investors. BGLI’s  lower debt to equity ratio implies a more financial stablility within
their business. Companies with a higher debt to equity ratio are considered more risky
to creditors and investors than companies with a lower ratio. The fall in numbers is a
consequence of a fall in total liabilities as well a much more comparitively insignificant
fall in stockholder’s equity.

Earnings Ratios
Times Interest Earned

2017 2018
168.1449559 341.9075975

Times Interest Earned

400

350

300

250
Times Interest Earned
200

150

100

50

0
2017 2018

Also known as the interest coverage ratio, measures the amount of income that can be
used to cover interest expenses in the future. The ratio indicates how many times PIL
could pay their interest expenses with its ‘before tax income’, and therefore a larger
number is considered more favorable than smaller ones. BGLI’s interest coverage has
almost doubls as a consequence of their interest expenses being cut down in half.

Earnings Per Share

 2017 2018
1.006896552 1.043920145

EPS
1.05

1.04

1.03
EPS
1.02

1.01

0.99
2017 2018

Also known as the net income per share, this ratio shows the amount of money each
share would receive if all profits were distributed as dividends at the end of the financial
year. The increase in the EPS figures indicate an increase in profitabilty which is backed
up by previous computed figures such as the net profit margin. This is beneficial for BGLI
as it means that it is welcoming for potential investors, as PIL has greater amount of
dividends to offer.

Dividend Yield
 2017 2018
0.050158275 0.042258589

Dividend Yield
0.05

0.05

0.05

0.05
Dividend Yield

0.04

0.04

0.04

0.04
2017 2018

Investors may use this financial ratio to analyze their returns on investments in the
shares. It computes the amount of cash dividends distributed to common shareholders
in relaton to the market value per share. The fall in dividend yield here is a result of
dividend per share, yet an increase in the market price of the shares, indicating that the
investors are being under-compensated for their investments.

Dividend Payouts
 2017 2018
1.071016583 0.939151599

Dividend Payouts
1.1

1.05

1
Dividend Payouts

0.95

0.9

0.85
2017 2018

This ratio shows the percentage of net income that BGI pays out as dividends. It also
helps to decipher what proportion of income the company keeps as retained earnings in
order to fund their operations. A consistant trend is preferred as opposed to a high
ratio. On the other hand, a company that has a downward trend of payouts is alarming
to investors. For example, if Bangladesh General Life Insurance company’s ratio keeps n
falling over the next few years, this indicates that the company can no longer afford to
pay such high dividends which is an indication of poor operating performance, that is
evident by the operating efficiency ratio formula.