1.

05
1.04
1.04
1.03
1.03
Axis Title

1.02
1.02
1.01
1.01
1
1
,2016 ,2017 ,2018
Axis Title

CURRENT RATIO
INTERPRETATION

Current Ratio helps us to know the current assets ability to pay its short-term obligations. The
current ratio has a benchmark of 2:1. It means that assets must be double than its liabilities. But it
should not be less than 1, it will show a negative picture because in that case we will have
current liabilities more than current assets. In the above case, from 2016 to 2018, the current
ratio has increased from 1.01 to 1.04 (it is more than 1) and is increasing as well so it is a good
effect and a good positive sign for company.

QUICK RATIO
Quick ratio provides a better measure of firm’s overall liquidity. It relates the most liquid assets
to current liabilities. It is a measure of liquidity calculated by dividing the firm’s current assets
minus inventory by its current liabilities.

Formula:
Quick Ratio = Current assets – Inventory
Current liabilities

2018 2017 2016

CURRENT ASSET 512893956 432257453 383797554

INVENTORY 262067924 21939863 170312593

CURRENT LIABILITY 497232354 432084957 388761118

QUICK RATIO 0.59 0.949 0.54

 QUICK RATIO
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2018 2017 2016

QUICK RATIO

Interpretation:
It should ideally be 1:1 and a quick ratio of 1 or greater is recommended it means that even after
deducting the less liquid assets the firm has enough of assets to cover the liabilities. The analysis
shows a increasing rate of Quick ratio. The Analysis revealed that quick ratio shows a increasing
trend as it increases from 0.949 in 2016 to 0.59 in 2017 and in 2018 0.527. Increase in quick
ratio is favourable for the company.

CASH RESERVE RATIO

The Cash Reserve Ratio refers to a certain percentage of total deposits the commercial banks are
required to maintain in the form of cash reserve with the central bank.

Formula:

=CASH AND BALANCES WITH TREASURY BANKS/ DEPOSITS AND OTHER

ACCOUNTS*100
 DESCRIPTION 2018 2017 2016

CASH AND BALANCES 35756024 26190481 23622411

WITH TREASURY BANK
DEPOSITS AND OTHER 453219740 374961096 342290763
ACCOUNTS
CASH RESERVE RATIO 7.88% 6.96% 6.90%

CASH RESERVE RATIO

8

7.8

7.6

7.4

7.2

6.8

6.6

6.4
2016 2017 2018

CURRENT RESERVE RATIO

INTERPRETATION

The less the cash reserve with the treasury banks, higher will be the ability of bank to finance it
or lending it. In the above scenario, BOP cash ratio has increased over the years from 2016 to
2018.
ADVANCES TO DEPOSITS RATIO
The ratio of advances to deposits is known as advances to deposits ratio. For banks, it is how
much they have coming in (deposits) vs how much they have going out (loans). The more money
the bank has loaned out generates more interest income provided the loans are to secure
borrowers. Deposits are obligations (debts) the bank has to the depositors.

Formula =ADVANCES/ DEPOSITS AND OTHER ACCOUNTS*100

DESCRIPTION 2018 2017 2016

ADVANCES 262067924 219398631 170312593

DEPOSITS AND OTHER 453219740 374961096 342290763

ACCOUNTS
ADVANCES TO 57.82% 58.51% 49.75%
DEPOSITS RATIO

ADVANCES TO DEPOSIT RATIO

60

58

56

54

52

50

48

46

44
2016 2017 2018

ADVANCES TO DEPOSIT RATIO

INTERPRETATION:

Bank major function is to lend money to other people or companies. This is what banks are there.
If the bank is not making and not attracting its customers to obtain loan from them, then the bank
cannot make money and cannot make huge profits. Bank should make the proper use of its
deposits. In the year 2016, bank was using 49.75% of its deposits as advances and in the year
2017, it is making 58.51% of lending while in 2018 it has decreased a little bit to 57.82% which
is not a good sign to some extent, it must be raised and bank should attract more and more
customers to take benefit from them. It should improve it in the coming years.

PROFITABILITY RATIOS

 Operating profit ratio

 Net profit margin
 Return on equity
 Return on assets
 Earnings per share

OPERATING PROFIT MARGIN

Operating profit is pure because it measures the profit earned on operations. It Measures the
percentage of each sales dollar remaining after all costs and expenses other than interest.

Formula:

Operating profit Margin=EBIT/REVENUE

 DESCRIPTION 2018 2017 2016

EBIT 16513896 15195704 10556880

SALES 29674488 31266427 29521719

OPERATING 0.56 0.49 0.957

PROFIT MARGIN

OPERATING PROFIT MARGIN

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2018 2017 2016

OPERATING PROFIT MARGIN

Interpretation
Operating profit of BOP has increased slightly in 2018. This increase is due to decrease in
interest expense. This indicates a positive trend. It is very encouraging for the bank. Hence BOP
has a strong financial position.

NET PROFIT MARGIN

It measures how profitable a company’s sales are after all expenses including taxes and interest
have been deducted.
Formula:
 Net Margin Ratio = earnings after taxes / Total revenue
DESCRIPTION 2018 2017 2016

EAT 4858354 4748321 2787449

SALES 29674488 31266427 29521719

NET PROFIT 0.16 0.15 0.09

MARGIN

net profit margin

0.18

0.16

0.14

0.12

0.1

0.08

0.06

0.04

0.02

0
2016 2017 2018

net profit margin

INTERPRETATIONS

Net profit margin of BOP has decreased slightly in 2018 as compared to last years. This increase
is due to increase in interest expense. This indicates a negative trend.
RETURN ON EQUITY

This ratio relates the net profits to the amount of capital funds or equity that have been employed
in making that profit.

Formula: RETURN ON EQUITY = PROFIT AFTER TAX / SHAREHOLDER’S

EQUITY * 100
DESCRIPTION 2018 2017 2016

PROFIT AFTER 4,858,354 4,748,321 2,787,449

TAX

SHARE 27,854,498 22,678,340 19,326,707

HOLDERS’S
EQUITY
RETURN ON 17% 20% 14%
EQUITY

RETURN ON EQUITY
25

20

15

10

0
2016 2017 2018

RETURN ON EQUITY

INTERPRETATION
It is an important and significant ratio from the investor’s point of view because investors have to
look this ratio in order to invest in the company, so this ratio must be high for gaining the
attention of the investors. If the firm is gaining high profits from its shareholder’s equity then it
is good for the company and for the investors as well. Investors want to see high returns on
equity ratios because it indicates that company is using its funds in an effective manner. In the
above case, it was 14% in 2016 and increased upto 20% in 2017. However, it dropped to 17% in
2018. Higher will be better for the bank.

RETURN ON ASSETS
The return on investment shows the average return earned by all the investors and stakeholders
of the business. The net profit available to the shareholders whereas markup is paid to the
creditor’s .Return on investment is a type of return on capital. It is a measure of firm’s ability to
reward those who provide long-term funds and to attract the providers.

Formula:

= PROFIT AFTER TAX/ TOTAL ASSETS*100

DESCRIPTION 2018 2017 2016

PROFIT AFTER 4,858,354 4,748,321 2,787,449

TAX

TOTAL ASSETS 545,214,131 472,283,654 420,370,188

RETURN ON 0.89% 1.00% 0.66%

ASSETS
 RETURN ON ASSETS
1.2

0.8

0.6

0.4

0.2

0
2016 2017 2018

RETURN ON ASSETS

INTERPRETATION

Since company assets' sole purpose is to generate revenues and produce profits, this ratio helps
both management and investors see how well the company can convert its investments in assets
into profits. Higher ratio is more favorable to investors because it shows that the company is
more effectively managing its assets to produce greater amounts of profit after tax. A positive
ROA ratio usually indicates an upward profit trend as well. In the above case, the ratio is
increasing from 0.66% to 1.00% from 2016 to 2017 but it decreased in 2018 to 0.89%. it means
bank need to improve it operations.
EARNINGS PER SHARE
The portion of a company's profit allocated to each outstanding share of common stock.
Formula:

=PROFIT AFTER TAX/ NUMBER OF SHARES OUTSTANDING

DESCRIPTION 2018 2017 2016

PROFIT AFTER 4,858,354000 4,748,321000 2,787,449000

TAX
NUMBER OF 1557164744 1556826557 1436829381
SHARES
OUTSTANDING
EARNINGS PER 3.12 3.05 1.94
SHARE EPS

EARNINGS PER SHARE

3.5

2.5

1.5

0.5

0
2016 2017 2018

EARNINGS PER SHARE

INTERPRETATION
Higher earnings per share is always better than a lower ratio because this means the company is
more profitable and the company has more profits to distribute to its shareholders. Although
many investors don't pay much attention to the EPS, a higher earnings per share ratio often
makes the stock price of a company rise. Since so many things can manipulate this ratio,
investors tend to look at it but don't let it influence their decisions drastically. Higher the ratio,
much better will be for the company. If the ratio is low and price per share is low, then it has
negative impact on the company. In 2016, it was 1.94 rupees but in 2017 it increased up to 3.05
and continued to increase up to 3.12 because both the profit after tax and outstanding shares
increased, which resulted in an increase in earnings per share.

LONG-TERM SOLVENCY RATIO/LEVERAGE RATIOS

 Debt-equity ratio
 Equity ratio
 Debt ratio
 Times interest earned

DEBT-EQUITY RATIO
It is another computation that determines the entity’s long term debt paying ability. This ratio
compares the total liabilities with total shareholder’s equity. From the perspective of long term
debt paying ability, low the ratio is, better the firm’s debt position.

Formula:

=TOTAL LIABILITIES/EQUITY

DESCRIPTION 2018 2017 2016

TOTAL 517,359,633 449,605,314 401,043,481

LIABILITIES
EQUITY 27,854,498 22,678,340 19,326,707
 DEBT TO EQUITY 18.57 19.82 20.75
RATIO

DEBT EQUITY RATIO

21

20.5

20

19.5

19

18.5

18

17.5

17
2016 2017 2018

DEBT EQUITY RATIO

INTERPRETATION:

This ratio is significant one, if this is low than it means that bank is much dependent upon its
shareholders and its equity. It is good sign for the banks that have debt to equity low, but if this is
high then it means that bank has acquired much of its finance from acquiring debts from
financial institutions or from somewhere else. Bank with high debt equity ratios are considered
to be risky because debt can be more expensive mode of financing as compared to equity. It also
means that creditors have financed more as compared to the investors. In the above case, in 2016
debts was 20 times more than equity, in 2017 it decreased to 19 times and in 2018 it dropped to
18 times, it means that debt was 18 times greater as compared to equity.

EQUITY RATIO
The equity ratio is a financial ratio indicating the relative proportion of equity used to finance a
company's assets

Formula:

=TOTAL EQUITY/ TOTAL ASSETS

DESCRIPTION 2018 2017 2016

TOTAL EQUITY 27,854,498 22,678,340 19,326,707

TOTAL ASSETS 545,214,131 472,283,654 420,370,188

EQUITY RATIO 5% 4% 4%

EQUITY RATIO
6

0
2016 2017 2018

EQUITY RATIO

INTERPRETATION:

It shows the percentage of total assets financed by the shareholder’s equity. It must be high,
because it will be favorable for the bank. High investment levels show that shareholders have
financed more. But if this ratio is low, it becomes a negative sign for the company because in
that case the bank will be more reliant on debts, which is an expensive source of financing. So,
higher the equity ratio, better it will be for the bank. In the above, BOP had 4% equity ratio in
2016- 2017, which means that 4% of its total assets were financed by equity. This ratio is very
low and it is not good for bank because lesser amount of investors are investing in the bank
which is an alarming situation for the bank. But in 2018, it rose to 5%.

DEBT RATIO
Debt ratio indicates firm’s long term debt paying ability. It indicates percentage of assets
financed by the Creditors.

Formula:

TOTAL LIABILITIES/ TOTAL ASSETS

DESCRIPTION 2018 2017 2016

TOTAL 517,359,633 449,605,314 401,043,481

LIABILITIES
TOTAL ASSETS 545,214,131 472,283,654 420,370,188

DEBT RATIO 0.94 0.95 0.95

 DEBT RATIO
0.95

0.95

0.95

0.95

0.94

0.94

0.94

0.94

0.94

0.93
2016 2017 2018

DEBT RATIO

INTERPRETATION

It is important to note that debt ratio calculates the percentage of liabilities in total assets. It
means that this ratio must be lower because lower ratio will show that total assets are more and
total liabilities are less in amount, in order to pay off the obligations. A company having lower
debt will have lower debt ratio. A ratio of .5 is considered to be a very good ratio showing half
liabilities than the total assets. Or said a different way, this company's liabilities are only 50
percent of its total assets. In the above ratios, bank had 95% of its liabilities, it means that in
2016, bank’s assets were financed by 93% of debts which is a very high ratio. In 2017, it still
remained at 95% but in 2018, it decreased to 94%, which is a very high ratio, showing that much
of the company’s assets are financed by the debts and an amount of total assets are financed by
shareholder’s equity.
TIMES INTEREST EARNED
It indicates firm long term debt paying ability from Income statement point of view. If the ratio is
adequate little danger exist that firm will not be able to meet its interest obligations. A relatively
high stable coverage of interest over the years indicates a good record .Low fluctuating coverage
from the year to year indicate a poor record. It Measures the firm ability to make contractual
interest payments, sometimes called the interest coverage ratio.

Formula: EARNING BEFORE TAXES/ INTEREST EXPENSE

DESCRIPTION 2018 2017 2016

EARNING 8049941 7529499 4306663

BEFORE TAXES
INTEREST 17430154 20198798 20525783
EXPENSE
TIMES INTEREST 0.46 0.37 0.20
EARNED

TIMES INTEREST EARNED

0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2018 2017 2016

TIMES INTEREST EARNED

Interpretation
This ratio indicates that Times Interest Earned ratio in the year 2018 is more as compared to
prior years. This indicates a positive trend .BOP is able to fulfill its interest obligations and it
has a good margin of safety.

ACTIVITY RATIOS
 Total asset turnover
 Fixed asset turnover

TOTAL ASSET TURNOVER

Indicates the efficiency with which the firm uses its assets to generate sales.

Formula:

=INTEREST OR MARKUP/ TOTAL ASSETS

DESCRIPTION 2018 2017 2016

INTERSET OR 17,430,154 20,198,798 20,525,783

MARKUP
TOTAL ASSETS 545,214,131 472,283,654 420,370,188

TOTAL ASSET 0.03 0.04 0.04

TURNOVER
 TOTAL ASSET TURNOVER
0.05

0.04

0.04

0.03

0.03

0.02

0.02

0.01

0.01

0
2016 2017 2018

TOTAL ASSET TURNOVER

INTERPRETATION

The graph is showing the decrease in the total assets turnover ratio. In 2016-2017, this ratio was
0.04 and gradually decreased to 0.03 in 2018.

FIXED ASSET TURNOVER

The fixed asset turnover ratio is an efficiency ratio that measures a company’s return on their
investment in property, plant, and equipment by comparing net sales with fixed assets.

Formula:

=INTEREST OR MARKUP/ FIXED ASSETS

 DESCRIPTION 2018 2017 2016

INTERSET OR 17,430,154 20,198,798 20,525,783

MARKUP
TOTAL ASSETS 7,692,675 6,484,312 5,490,121

TOTAL ASSET 2.26 3.11 3.73

TURNOVER

FIXED ASSET TURNOVER

4

3.5

2.5

1.5

0.5

0
2016 2017 2018

FIXED ASSET TURNOVER

INTERPRETATION

The graph shows the decline in fixed assets turnover. From 2016 to 2018, fixed assets
turnover has decreased from 3.73 to 2.26.