1

Letter of transmittal
14th December, 2011 Course Instructor, Mr. Khairul Alom Fin-101, Sec-3 East West University. Subject: Letter of Transmittal. Dear Sir, With great pleasure we submit our term paper on Ratio Analysis. that you have assigned to us as an important requirement of the Fin-101 course. We have found the study to be quite interesting, beneficial and insightful. We have tried our level best to prepare an effective and creditable report. We honestly hope that our analysis will help to give idea of a clear scenario of financial analysis of the banks based on different types of ratio analysis. We hope you will find this report worth all the labor we have put in it. We shall be available to answer any question for clarification. Thank you for your sincere support. Yours Sincerely, Enamul Hasan Shakera Hannan chowdhury Sabila Muntaha Talha Munir

Table of Content
1 PREFATORY PARTS Letter Of transmittal Table of contents Acknowledgements Executive Summary 2 INTRODUCTION 2.1 2.2 2.3 2.4 2.5 3 4 Origin of the Report Objective of the Study Methodology Limitation Background Of the Study 6 7 8 9 10 11-17 1 2 3 4

Theory review ORGANIZATION & RATIO ANALYSIS 4.1 4.2 4.3 4.4 Bank Asia ltd. Dutch Bangla Bank ltd. Eastern Bank ltd. Prime Bank ltd.

18-34 35-48 49-64 65-80 81 82

5 6 7 8

Recommendation Conclusion Reference Appendix

ACKNOWLEDGEMENT

The hardest steel goes through the hottest furnace. The same was the case with us. We faced many problems when we started the work on report but we are greatly thankful to Almighty Allah for enabling us to get successfully through our responsibilities. Very warm and special thanks to our respected course instructor M r.Khairul Alam, whose real dedication and devotion kindled in our hope and light. Sir, we thank your ability of extracting the very best out of us, for your patience and perseverance, and also for acknowledging the efforts made by us during the whole semester. We would like to give thanks especially to our friends and group members, for their enthusiastic encouragements and helps during the preparation of this term paper by sharing ideas regarding this subject and for their assistance in typing and proof reading this manuscript.

Executive summary:
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statement so that the strength and weakness of a firm as well as its historical performance and current financial condition can be determined. The purpose of this report is to analyze the financial condition of Bank Asia, Dutch-Bangla bank, Eastern Bank & Prime Bank. To do it we make comparison between three years (2008, 2009, and 2010). The basic inputs to ratio analysis are the firms income statement and balance sheet. In this report, financial ratio analyses are conducted for wishing and evaluating the operating performance of the companies.

Introduction

Origin of the report

Here, we have shown the ratio analysis of different companies. Our course instructor Mr. Khairul Alom assigned us to make a standard report on ratio analysis. For that, he told us to choose 4 companies. And we selected four commercial Banks for our analysis. Those are1. Bank Asia ltd. 2. Dutch-Bangla Bank ltd. 3. Eastern Bank ltd. 4. Prime Bank Then our instructor told us to do all types of activities on, 19 October 2011 (Authorization Date) and complete the report and submit it on 21st December, 2011.

Objective of the study

Standardization or simplification of financial information for making comparisons Evaluating current operations Comparing performance with past performance Studying the efficiency of operations Comparing performance against other firms or industry standards Study the risk of operations Tables and charts for analysis Suggestion regarding problems

Methodology
To make a financial report on these four companies we have to give our full effort. It is not an easy job to analyze these bankss financial analysis. But we tried our best. At first we collected information of the yearly annual report of prime bank from website and from other sources. Besides as we have to make a comparison among the similar banks in the industry we have to collect their annual reports as well. To collect further information, we tried to meet some of the employees of the respective banks. But they were too busy on their job. One of the employees gave us some information but that cannot help us much in making the report. So, we have to analyze lots of things by ourselves. And we were enabled to do so with the help of our books and course material. It was really tough for us to understand a lot of things, as we know real world is totally different form the scenario whatever we learnt in our books. In this regard, our course instructor helps us so much that finally we are able to complete our task properly.

Limitations
We had to face lots of problem and struggle to complete this term paper. On the annual report we got a lot of problems. The balance sheets were puzzle to us. The website of Eastern Bank Ltd. is not so much informatics. we visited some the banks but they didnt give us much information & instruction that could help us. We found it difficult to understand the meaning of some of the terms in income statement and balance sheets. We had to face a lot of hazards on arranging all the information. But we hope and believe that we have succeeded to make a standard term paper at last after lots of struggling.

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Background of the study

A financial ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Simply, ratio analysis is a tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.

Since financial statement ratio analysis looks at relationship inside the firm, a firm of one size can be directly compared to a second industry / firm, which may be larger or smaller or even on a different business. Financial statement analysis is a method of comparison not dependent on the size of other firm. A financial statement analysis provides a broader basis for comparison then does raw numbers. However, ratios on their own, without year-to-year or other industry /firm comparative ratios are of little use in judging the health or future of the Industry/firm being analyzed.

In this report, we will going to show the ratio analysis and the comparison of year to year performance of those four banks for the years 2008 to 2010.

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Theory review

Ratio analysis
As the definition of ratio analysis we know that it involves method of calculating and interpreting financial ratios to analysis and monitor the firms performance. The basic inputs to ratio analysis are the firms income statement and balance sheet. We analyze the ratio under the following categories:-

A. Liquidity Ratio
Current ratio:
The Current Ratio formula is: The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt - as there are many ways to access financing - but it is definitely not a good sign.

The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations. Because business operations differ in each industry, it is always more useful to compare companies within the same industry.

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Quick ratio
A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets. Calculated by:
sets- Inventorie s Quick ratio = Current As Current Liabilities

Companies with ratios of less than 1 cannot pay their current liabilities and should be looked at with extreme caution. Furthermore, if the acid-test ratio is much lower than the working capital ratio, it means current assets are highly dependent on inventory. Retail stores are examples of this type of business.

The term comes from the way gold miners would test whether their findings were real gold nuggets. Unlike other metals, gold does not corrode in acid; if the nugget didn't dissolve when submerged in acid, it was said to have passed the acid test. If a company's financial statements pass the figurative acid test, this indicates its financial integrity.

B. Leverage Ratio
Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses.

Debt ratio

A ratio that indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load.

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The Debt Ratio formula is = A debt ratio of greater than 1 indicates that a company has more debt than assets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk.

C. Profitability ratio
A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. Some examples of profitability ratios are profit margin, return on assets and return on equity.

Return on Asset (ROA)

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment".

The formula for return on assets is:

ROA tells you what earnings were generated from invested capital (assets). ROA for public companies can vary substantially and will be highly dependent on the industry. This is why when using ROA as a comparative measure, it is best to compare it against a company's previous ROA numbers or the ROA of a similar company.

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Return of Equity (ROE)

The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

ROE is expressed as a percentage and calculated as: ROE

Net Income Total Common Equity

Return on Investment (ROI)

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. ROT is expressed as a percentage and calculated as: ROI

Net Income Total Investment

D. Gross profit margin

A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. It is also known as "gross margin". Calculated as: Gross profit margin=
gross profit sales

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E. Operating profit margin

A ratio used to measure a company's pricing strategy and operating efficiency.

Calculated as: Operating profit margin=

Operatingexpense sales

Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt.

F. Net profit margin

A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings.

Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage Calculated as: Net profit margin=
Net Income sales

G. Total asset turnover

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales in dollars by assets in dollars.

Formula: Also known as the Asset Turnover Ratio. Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher the number the better. It also indicates pricing

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strategy: companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover.

H. Inventory Turnover Ratio

A ratio showing how many times a company's inventory is sold and replaced over a period. the

The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or "inventory turnover days".

Although the first calculation is more frequently used, COGS (cost of goods sold) may be substituted because sales are recorded at market value, while inventories are usually recorded at cost. Also, average inventory may be used instead of the ending inventory level to minimize seasonal factors. This ratio should be compared against industry averages. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying.

High inventory levels are unhealthy because they represent an investment with a rate of return of zero. It also opens the company up to trouble should prices begin to fall.

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I. Days sales outstanding

A measure of the average number of days that a company takes to collect revenue after a sale has been made. A low DSO number means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money.

Day sales outstanding is calculated as:

Due to the high importance of cash in running a business, it is in a company's best interest to collect outstanding receivables as quickly as possible. By quickly turning sales into cash, a company has the chance to put the cash to use again - ideally, to reinvest and make more sales. The DSO can be used to determine whether a company is trying to disguise weak sales, or is generally being ineffective at bringing money in. For most businesses, DSO is looked at either quarterly or annually.

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Bank Asia Limited

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Company Background

Bank Asia Limited is a scheduled commercial bank in the private sector established under the Banking Company Act 1991 and incorporated in Bangladesh as a public limited company under the Companies Act 1994 to carry out banking business in Bangladesh.

Bank Asia has been launched by a group of successful entrepreneurs with recognized standing in the society. The management of the Bank consists of a team led by senior bankers with decades of experience in national and international markets. The senior management team is ably supported by a group of professionals many of whom have exposure in the international market. It set milestone by acquiring the business operations of the Bank of Nova Scotia in Dhaka, first in the banking history of Bangladesh. It again repeated the performance by acquiring the Bangladesh operations of Muslim Commercial Bank Ltd. (MCB), a Pakistani bank. In the year 2003 the Bank again came to the limelight with oversubscription of the Initial Public Offering of the shares of the Bank, which was a record (55 times) in our capital market's history and its shares commands respectable premium. The asset and liability growth has been remarkable. Bank Asia has been actively participating in the local money market as well as foreign currency market without exposing the Bank to vulnerable positions. The Bank's investment in Treasury Bills and other securities went up noticeably opening up opportunities for enhancing income in the context of a regime of gradual interest rate decline. Bank Asia Limited started its service with a vision to serve people with modern and innovative banking products and services at affordable charge. Being parallel to the cutting edge technology the Bank is offering online banking with added delivery channels like ATM, Tele-banking, SMS and Net Banking. And as part of the bank's commitment to provide all modern and value added banking service in keeping with the very best standard in a globalize world.

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Our Mission To assist in bringing high quality service to our customers and to participate in the growth and expansion of our national economy. To set high standards of integrity and bring total satisfaction to our clients, shareholders and employees. To become the most sought after bank in the country, rendering technology driven innovative services by our dedicated team of professionals.

Our Vision Bank Asia's vision is to have a poverty free Bangladesh in course of a generation in the new millennium, reflecting the national dream. Our vision is to build a society where human dignity and human rights receive the highest consideration along with reduction of poverty.

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Major product and service:

Bussiness Banking Term loan Overdraft Demand Loan Time Loan Packing Credit Letter of Credit Loan Against Trust Receipt Loan Syndication & Structured Finance Trade finance Working capital finance Bill discounting Letter of guarantee Small & Medium Enterprise (SME) Term Loan Subidha -Unsecured Trading Sondhi -Secured Trading Sristi -Unsecured Manufacturing Shofol -Unsecured Service Sheba -Secured Service Over Draft Somadhan - Secured Special Products Utshob -Seasonal Business Subarno-Women Entrepreneur Consumer Finance Auto Loan Consumer Durable Loan Unsecured Personal Loan House Finance Loan for Professional Senior Citizen Support Credit Card Visa Local Currency Visa Dual Currency Visa International Master Card Treasury & Foreign Exchange Money market Overnight call Repo Swap

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Term placement Reverse Report FX market Spot transaction Forward transaction Deposit Accounts Saving Account Current Account Short Term Deposit Fixed Term Deposit Foreign Currency Account Deposit Pension Scheme Monthly Benefit Plus Double Benefit Plus Triple Benefit Plus Islamic Banking Deposit Procucts Al-Wadiah Current Account Mudaraba Savings Account Mudaraba Special Notice Deposit Account Mudaraba Term Deposit Account Mudaraba Hajj Savings Scheme Mudaraba Deposit Pension Scheme Mudaraba Monthly Profit Paying Deposit Scheme Investment Modes / Products Bai Murabaha Muajjal (Working Capital Finance) Bai Murabaha Muajjal Post Import Hire Purchase Shirkatul Melk (Term Finance) Quard against Deposit Products SME financing Consumer financing Quard against Accepted Bill Documentary Bills for Collection Service Products ATM Services Remittance Service Locker Service Online Banking Internet Banking Phone Banking Mobile Banking SWIFT Capital market division Brokerage operation

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Ratio analysis of Bank Asia

Current Ratio
2010 Current ratio 2009 2008

3.63x

4.94x

3.5x

Current ratio
6 5 4 3 2 1 0 Current ratio

TIMES

2008 3.5

2009 4.94

2010 3.63

In 2008, Current ratio was 3.50x and it has increased gradually in 2009 which was 4.94x. This indicates that the firm has properly managed their current assets as well as current liabilities. This determines their strong liquid position in the industry. But in 2010 the ratio decreased in 3.63. This incurred because the banks current liability increased than the last year.

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Acid test/ Quick test ratio

2010 Acid test/ Quick ratio 2009 2008

3.6x

4.9x

3.48x

Acid test/ Quick ratio

6 5 4

TIMES

3 2 1 0

2008 3.48

2009 4.9

2010 3.6

Acid test/ Quick ratio

In 2008, quick ratio of Bank Asia was 3.48x. In year 2009, the rate has increased by 4.9 and become 1x which really implies a better position in liquidity than previous years. But 2010 the ratio gradually decreased by 3.6. This happened because of their mismanagement of current liabilities. Our evaluation of the liquidity ratios suggests that banks liquid position currently is fairly strong in the market but it was strongest in 2009

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Debt/ Leverage ratio

2010 Debt/ Leverage ratio 2009 2008

93.2 %

92.78 %

93.7 %

Debt/ Leverage ratio

93.80% 93.60% 93.40% PERNCENTAGE 93.20% 93.00% 92.80% 92.60% 92.40% 92.20% Debt/ Leverage ratio 2008 93.70% 2009 92.78% 2010 93.20%

Debt Ratio of Bank Asia was 93.70% in 2008 and 92.78% in 2008 and then decrease to 93.20% in 2010. Among these three years the ratio of 2010 was lowest which indicates the asset of 2010 is higher than the debt of 2010 and also higher than the assets of previous years.

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Profitability ratio: o ROA(Return on Asset)

2010 2009 2008

Return On Asset

1.83 %

1.93 %

1.28 %

Return on Asset
2.50% 2.00% PERCENTAGE 1.50% 1.00% 0.50% 0.00% Return on Asset

2008 1.28%

2009 1.93%

2010 1.83%

Return on assets of Bank Asia stood at 1.28% in 2008 and in 2009 it has increased at 1.93%.But in 2010 it has decreased at 1.83% This occurs because of net income. Net profit after tax was higher in 2009 comparing to 2008 and 2010. Thats why ROA was highest in year 2009

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o ROE(Return on Equity)

2010

2009

2008

Return on Equity

27.3 %

26.78 %

20.6 %

Return on Equity
30.00% 25.00% PERCENTAGE 20.00% 15.00% 10.00% 5.00% 0.00% Return on Equity

2008 20.60%

2009 26.78%

2010 27.30%

Return on equity of Bank Asia was 20.60% in 2008 which increased in 2009 and remains at 26.78% again in 2010 the ratio dramatically increased at 27.30%. As we know that net income from 2009 to 2010 has increased the Net profit after tax and the total equity was also higher in 2010. Thats why in that year ROE is higher than other two years.

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o ROI(Return on Investment)

2010

2009

2008

Return on Investment

2.10%

2.21%

1.48%

Return on Investment
2.50% 2.00% PERCENTAGE 1.50% 1.00% 0.50% 0.00% Return on Investment

2008 1.48%

2009 2.21%

2010 2.10%

In 2008 the ROI was 1.26 then in 2009 it increased at 2.10 and again in 2010 gradually the ROI increased at 2.28. ROI evaluate the efficiency of an investment or compare the efficiency of a number of different investments. Comparing this 3 years ROI we can see that 2010 got the highest rate and the net income and investment both were highest in 2010 that means the efficiency of investments of Bank Asia increased gradually day by day.

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Gross Profit Margin

2010 2009 2008

Gross Profit Margin

35.3 %

28.002 %

24.8 %

Gross Profit Margin

40.00% 35.00% 30.00%

PERCENTAGE

25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2008 24.80% 2009 28.00% 2010 35.30%

Gross Profit Margin

In 2008 the GPR of Bank was 21 and it slightly increased at 22.35 at 2009 but in 2010 the GPR of the bank dramatically increased at 35.20. . Gross profit margin mainly serves as the source for paying additional expenses and future savings. Comparing this 3 years the graph shows that the ROI of the bank increased every year gradually and the rate of 2010 was the highest as because the interest income and gross profit of Bank Asia both were highest in 2010

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Operating Profit Margin

2010 2009 2008

Operating Profit Margin

29.13 %

24.2 %

19.8 %

Operating Porfit Margin

35.00% 30.00% PERCENTAGE 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Operating Porfit Margin 2008 19.80% 2009 24.20% 2010 29.13%

The graph shows that the OPR of Bank Asia was 19.80 in 2008 and in 2009 it increased at 24.20 and gradually in 2010 and that was the highest rate among these 3 years as because the operating profit and interest rate both were also highest in 2010.

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Net Profit Margin

2010 2009 2008

Net-Profit Margin

23.02 %

21.2 %

13.8%

Net-Profit Margin
25.00% 20.00% PERCENTAGE 15.00% 10.00% 5.00% 0.00% Net-Profit Margin

2008 13.80%

2009 21.20%

2010 23.02%

The Net Profit Margin measures how much out of every dollar of revenue a company actually keeps in earnings. In 2008 the NPM of Bank Asia was 13.80% and in 2009 it increased at 21.20% and in 2010 the rate increased at 24.90%. The graph shows that the rate of 2010 was the highest.

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Total Asset Turnover

2010 2009 2008

Total Asst Turnover

0.079x

0.090x

0.093x

Total Asset Turnover

9.50% 9.00% TIMES

8.50%

8.00%

7.50%

7.00% Total Asset Turnover

2008 9.30%

2009 9%

2010 7.90%

Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue. In 2008 the Total Asset Turnover of Bank Asia was 9.3% and in 2009 it increased at 9% but in 2010 the rat decreased at 7.9% .The graph shows that the rate of 2008 was the highest and the rate of 2010 was the lowest. Though the interest income and total asset of 2009 and 2008 was lower than the interest income and total asset of 2010, the difference between the interest income and total asset of 2010 is higher than 2009 and 2008 thats why the rate of Total Asset Turnover of 2009 and 2008 was higher than 2010.

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Inventory Turnover Ratio

2010 2009 2008

Inventory Turnover Ratio

7.07x

9.49x

13.36x

Inventory Turnover Ratio

16 14 12 10 TIMES 8 6 4 2 0 Inventory Turnover Ratio 2008 13.36 2009 9.49 2010 7.07

In 2008 the Inventory Turnover Ratio of Bank Asia was 13.75 and in 2009 it increased at 9.49 but in 2010 the rate decreased at 7.07.The graph shows that the rate of 2008 was the highest and the rate of 2010 was the lowest. The paid interest and the average inventory of 2010 was highest and the difference between the paid interest and the average inventory of 2010 is higher than the 2009 and 2008 thats why the ratio of Inventory Turnover of 2010 was lower than other 2 years

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Day Sales Outstanding

2010 2009 2008

Day Sales Outstanding

3414

2896

2893

Day Sales Outstanding

3500 3400 3300 DAYS 3200 3100 3000 2900 2800 2700 2600 Day Sales Outstanding 2008 2893 2009 2896 2010 3414

Day sale outstanding measure the average number of days that a company takes to collect revenue after a sale has been made. Comparing the three years DSO, we find that DSO is highest in 2010 which was 3414 days. This is obviously not a good sign for the bank. That indicates the banks policy to collect receivables was not working properly. And they were unable to collect receivables properly. In this case, the bank was slightly in a good position in year 2008 and 2009.

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Dutch-Bangla Bank Limited

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Company Background
Dutch-Bangla Bank started operation is Bangladesh's first joint venture bank. The bank was an effort by local shareholders spearheaded by M Sahabuddin Ahmed (founder chairman) and the Dutch company FMO. From the onset, the focus of the bank has been financing high-growth manufacturing industries in Bangladesh. The rationale being that the manufacturing sector exports Bangladeshi products worldwide. Thereby financing and concentrating on this sector allows Bangladesh to achieve the desired growth. DBBL's other focus is Corporate Social Responsiblity (CSR). Even though CSR is now a cliche, DBBL is the pioneer in this sector and termed the contribution simply as 'social responsiblity'. Due to its investment in this sector, DBBL has become one of the largest donors and the largest bank donor in Bangladesh. The bank has won numerous international awards because of its unique approach as a socially conscious bank. Even with a history of hefty technological investments and an even larger donations, consumer and investor confidence has never waned. Dutch-Bangla Bank stock set the record for the highest share price in the Dhaka Stock Exchange in 2008.

Vision
Dutch-Bangla Bank dreams of better Bangladesh, where arts and letters, sports and athletics, music and entertainment, science and education, health and hygiene, clean and pollution free environment and above all a society based on morality and ethics make all our lives worth living. DBBLs essence and ethos rest on a cosmos of creativity and the marvelmagic of a charmed life that abounds with spirit of life and adventures that contributes towards human development.

Mission
Dutch-Bangla Bank engineers enterprise and creativity in business and industry with a commitment to social cause. "Profits alone" do not hold a central focus in the Banks operation; because "man does not live by bread and butter alone".

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Ratio analysis of Dutch-Bangla Bank

Current Ratio
2010 2009 2008

Current Ratio

2.15x

1.71x

2.09x

Current Ratio
2.5 2 1.5 1 0.5 0 Current Ratio

TIMES

2008 2.09

2009 1.71

2010 2.15

In 2008, Current ratio was 2.09x and it has decreased gradually in 2009 which was 1.71x. This incurred because the banks current liability increased than the last year. But in 2010 the ratio increased in 2.15. This indicates that the firm has properly managed their current assets as well as current liabilities. This determines their strong liquid position in the industry.

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Acid Test/ Quick Ratio

2010 2009 2008

Acid test/ Quick Ratio

2.06x

1.67x

2.05x

Acid test/Quick Ratio

2.5 2 1.5 1 0.5 0 Acid test/Quick Ratio

TIMES

2008 2.05

2009 1.67

2010 2.06

In 2008, quick ratio of Dutch Bangla bank was 2.05x. In year 2009, the rate has deccreased by 1.67. This is happened because of their mismanagement of current liabilities. But in 2010 the ratio has increased by 2.06. Our evaluation of the liquidity ratios suggests that Prime banks liquid position currently is fairly strong in the market.

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Debt/ Leverage Ratio

2010 2009 2008

Debt/ Leverage Ratio

93.05 %

94.6 %

94.6 %

Debt/Leverage Ratio
95.00% 94.50% PERCENTAGE 94.00% 93.50% 93.00% 92.50% 92.00% Debt/Leverage Ratio

2008 94.60%

2009 94.60%

2010 93.05%

Debt Ratio of DBBL was 94.60 in 2008 & 2009 and then decrease to 93.05% in 2010. Among these three years the ratio of 2010 was lowest which indicates the asset of 2010 is higher than the debt of 2010 and also higher than the assets of previous years.

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Profitability o ROA(Return on Asset)

2010 2009 2008

Return on Asset

1.98 %

1.39 %

1.35 %

Return on Asset
2.50% 2.00% PERCENTAGE

1.50%

1.00%

0.50%

0.00% Return on Asset

2008 1.35%

2009 1.39%

2010 1.98%

Return on assets of DBB stood at 1.35% in 2008 and in 2009 it has slightly increased at 1.39%. And in 2010 it has increased at 1.98% This occurs because of net income. Net profit after tax was higher in 2010 comparing to 2008 and 2009. Thats why ROA was highest in year 2010

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o ROE(Return on Equity)
2010 2009 2008

Return on Equity

28.63 %

26.14 %

25.5 %

Return on Equity
29.00% 28.50% 28.00% PERCENTAGE 27.50% 27.00% 26.50% 26.00% 25.50% 25.00% 24.50% 24.00% 23.50% Return on Equity 2008 25.50% 2009 26.14% 2010 28.63%

Return on equity of DBB was 25.50% in 2008 which increased dramatically in 2009 and remains at 26.14% again in 2010 the ratio increased at 28.63%. As we know that net income from 2009 to 2010 has increased the Net profit after tax was higher in 20 10 and the total equity was also higher in 2010. Thats why in that year ROE is higher than other two years.

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o ROI (Return on Investment)

2010 2009 2008

Return on Investment

2.56%

1.95%

1.77%

Return on Investment
3.00% 2.50% PERCENTAGE 2.00% 1.50% 1.00% 0.50% 0.00% Return on Investment

2008 1.77%

2009 1.95%

2010 2.56%

In 2008 the ROI was 1.77% then in 2009 it increased at 1.99% and again in 2010 gradually the ROI increased at 2.56%. ROI evaluate the efficiency of an investment or compare the efficiency of a number of different investments. Comparing this 3 years ROI we can see that 2010 got the highest rate and the net income and investment both were highest in 2010 that means the efficiency of investments of the bank increased gradually day by day.

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Gross Profit margin

2010 2009 2008

Gross Profit Margin

51.93 %

33.5 %

33.3 %

Gross Profit Margin

60.00% 50.00% PERCENTAGE 40.00% 30.00% 20.00% 10.00% 0.00% Gross Profit Margin

2008 33.30%

2009 33.50%

2010 51.93%

In 2008 the GPR of DBB was 33.30% and it slightly increased at 33.50% at 2009 but in 2010 the GPR of the bank dramatically increased at 51.93%. . Gross profit margin mainly serves as the source for paying additional expenses and future savings. Comparing this 3 years the graph shows that the ROI of the bank increased every year gradually and the rate of 2010 was the highest as because the interest income and gross profit both were highest in 2010

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Operating Profit Margin

2010 2009 2008

Operating profit Margin

41.2 %

34.4 %

31.2 %

Operating Profit margin

45.00% 40.00% 35.00% PERCENTAGE 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Operating Profit margin 2008 31.20% 2009 34.40% 2010 41.20%

Operating profit margin measures a company's pricing strategy and operating efficiency. The graph shows that the OPR of Dutch Bangla Bank was 31.20% in 2008 and in 2009 it increased at 34.40 and gradually it reached at 41.20% in 2010. The OPR was the highest rate in 2010 among these 3 years as because the operating profit and interest rate both were also highest in 2010.

45

Net Profit Margin

2010 2009 2008

Net Profit Margin

27.9 %

18.4 %

15.06 %

Net Profit Margin

30.00% 25.00% PERCENTAGE 20.00% 15.00% 10.00% 5.00% 0.00% Net Profit Margin

2008 15.06%

2009 18.40%

2010 27.90%

The Net Profit Margin measures how much out of every dollar of revenue a company actually keeps in earnings. In 2008 the NPM of DBB was 15.06% and in 2009 it increased at 18.40% but in 2010 the rate increased at 27.90%. The graph shows that the rate of 2010 was the highest.

46

Total Asset Turnover

2010 2009 2008

Total Asset Turnover

0.071x

0.075x

0.089x

Total Aseet Trunover

0.1 0.09 0.08 0.07 TIMES 0.06 0.05 0.04 0.03 0.02 0.01 0 Total Aseet Trunover 2008 0.089 2009 0.075 2010 0.071

Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue. In 2008 the Total Asset Turnover of DBB was 8.9%2 and in 2009 it decreased at 8.6% but in 2010 the rate again decreased at 0.078 .The graph shows that the rate of 2009 was the highest and the rate of 2008 was the lowest.

47

Inventory Turnover Ratio

2010 2009 2008

Inventory Turnover Ratio

0.91x

2.11x

2.91x

Inventroy Turnover
3.5 3 2.5 TIMES 2 1.5 1 0.5 0 Inventroy Turnover 2008 2.91 2009 2.11 2010 0.91

The inventory Turnover ratio shows how many times a company's inventory is sold and replaced over a period. In 2008 the Inventory Turnover Ratio of was 2.91 and in 2009 it decreased at 2.11 but in 2010 the rate decreased at 0.91. The graph shows that the rate of 2008 was the highest and the rate of 2009 was the lowest.

48

Day Sales Outstanding

2010 2009 2008

Day Sales Outstanding

3446

2875

2872

Day Sales Outstading

3500 3400 3300 3200 3100 DAYS 3000 2900 2800 2700 2600 2500 Day Sales Outstading 2008 2872 2009 2875 2010 3446

Day sale outstanding measure the average number of days that a company takes to collect revenue after a sale has been made. Comparing the three years DSO, we find that DSO is highest in 2010 which was 3446 days. This is obviously not a good sign for the bank. That indicates the banks policy to collect receivables was not working properly. And they were unable to collect receivables properly. In this case, the bank was slightly in a good position in year 2008 and 2009.

49

Eastern Bank Limited

50

Company Background
With a vision to become the bank of choice and to be the most valuable financial brand in Bangladesh, Eastern Bank Ltd. (EBL) began its journey in .1992Over the years EBL has

established itself as a leading private commercial bank in the country with undisputed leadership in Corporate Banking and a strong Consumer and SME growth engines. EBL's ambition is to be the number one financial services provider, creating lasting value for its clientele, shareholder, and employees and above all for the community it operates in.

Vision
To become the most valuable brand in the financial services in Bangladesh creating long-lasting value for our stakeholders and above all for the community we operate in by transforming the way we do business and by delivering sustainable growth.

Mission
We will deliver service excellence to all our customers, both internal and external. We will ensure to maximize shareholders' value. We will constantly challenge our systems, procedures and training to maintain a cohesive and professional team in order to achieve service excellence. We will create an enabling environment and embrace a team based culture where people will excel.

51

Corporate Banking Products & Services:

Our products cover the following broad categories: Industrial and Project Financing Investments/ Capital Market Services Transaction services Trade Services and FX Deposits & Cash Management Solutions

Corporate Banking Products & Services Regular Credit Products Short-Term Financing Products: Working Capital Loan Overdraft (OD) Letter of Credits Sight/Usance Demand Loan Time Loan

Long Term Financing Products: Term Loan Financing o Medium Term (Max 5 years) o Long Term (Above 5 Years)

Regular Trade Service Products are: Letter of Credit (Documentary Credit) Back-to-back Letter of Credit Shipping Guarantee Delivery Order Export LC (Advising & Transfer) Letter of Guarantee Import Bill Handling Export Bill Negotiation/Collection Import Loan Letter of Trust Receipt (LTR) Time Loan

52

Specialized Trade Service Products are: EDF loan OBU Financing Packing Credit Demand Loan Tailor made Structured LC Multi-Bank Products/Services include: Loan Syndication (offshore & Onshore) Private Placement of Equity Project Finance Trustee and Legal Facilitator Feasibility Study Financial/Corporate Advisory Services

Cash Management Solutions: Payment & Collection Solutions Bulk Cheque Processing Utility Bill Collection Vendor/Salary payment Cash Pick Up & Delivery Hajj Remittances processing Managing IPOs as Lead Bank Act as Banker to the issue in IPOs Internet Banking Automated Cheque Writing Software

53

Ratio analysis of Eastern Bank limited

Current ratio
2010 2009 2008

Current Ratio

2.32x

2.37x

1.93x

Current Ratio
2.5 2 1.5 1 0.5 0 Current Ratio

TIMES

2008 1.93

2009 2.37

2010 2.32

In 2008 the current ratio of Eastern Bank was 1.93x and it has increased gradually in 2009 which was 2.37x. This indicates that the firm has properly managed their current assets as well as current liabilities. This determines their strong liquid position in the industry. But in 2010 the ratio decreased in 2.32 this incurred because the banks current liability increased than the last year.

54

Acid test/ Quick Ratio

2010 2009 2008

Acid Test/ Quick Ratio

2.29x

2.35x

1.9x

Acid Test/ Quick ratio

2.5 2 TIMES

1.5

0.5

0 Acid Test/ Leverage ratio

2008 1.9

2009 2.35

2010 2.29

In 2008, quick ratio of Eastern Bank was 1.9x. In year 2009, the rate has increased by 2.35 and become 1x which really implies a better position in liquidity than previous years. But 2010 the ratio slightly decreased by 2.29. This happened because of their mismanagement of current liabilities. Our evaluation of the liquidity ratios suggests that Prime banks liquid position currently is fairly strong in the market but it was strongest in 2009

55

Debt/ Leverage Ratio

2010 2009 2008

Debt/ Leverage Ratio

85.2 %

87.9 %

91.2%

Debt/Leverage Ratio
92.00% 91.00% 90.00% PERCENTAGE 89.00% 88.00% 87.00% 86.00% 85.00% 84.00% 83.00% 82.00% Debt/Leverage Ratio 2008 91.20% 2009 87.90% 2010 85.20%

Debt Ratio of Eastern Bank was 91.20% in 2008 and in 2009 it decrease at 87.90% and then in 2010 it again decreased at 85.2%. Among these three years the ratio of 2010 was lowest which indicates the asset of 2010 is higher than the debt of 2010 and also higher than the assets of previous years.

56

Profitability o ROA(Return on Asset)

2010 2009 2008

Return on Asset

2.95 %

2.08 %

1.46%

Return on Asset
3.50% 3.00% PERCENTAGE 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Return on Asset 2008 1.46% 2009 2.08% 2010 2.95%

Return on assets of Eastern Bank stood at 1.46% in 2008 and in 2009 it has increased at 2.08% and in 2010 it has gradually increased at 2.95%. That means 2010 the companies ROA was the highest and the bank is gradually improve its condition.

57

o ROE ( Return on Equity)

2010 2009 2008

Return on Equity

20.06 %

17.25 %

16%

Rerutn on Equity
25% 20% PERCENTAGE 15% 10% 5% 0% Rerutn on Equity

2008 16%

2009 17.25%

2010 20.06%

Return on equity of eastern bank. Was 16% in 2008 which increased in 2009 and remains at 17.25% again in 2010 the ratio gradually increased at 20.06%.The graph shows that the company was its best position in 2010 and the company is also gradually improve its condition.

58

ROI (Return on Investment)

2010 2009 2008

Return on Investment

3.54%

2.57%

1.78%

Return on Investment
4.00% 3.50% 3.00% PERCENTAGE 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Return on Investment 2008 1.78% 2009 2.57% 2010 3.54%

In 2008 the ROI was 1.78% then in 2009 it increased at 2.57% and again in 2010 gradually the ROI increased at 3.54%. ROI evaluate the efficiency of an investment or compare the efficiency of a number of different investments. Comparing this 3 years ROI we can see that 2010 got the highest rate and the net income and investment both were highest in 2010 that means the efficiency of investments of Prime bank increased gradually day by day.

59

Gross Profit Margin

2010 2009 2008

Gross Profit Margin

42.6 %

37.2 %

29.6%

Gross Profit Margin

45.00% 40.00% 35.00% PERCENTAGE 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Gross Profit Margin 2008 29.60% 2009 37.20% 2010 42.60%

In 2008 the GPR of eastern bank was 29.60% and it increased at 37.20% at 2009 but in 2010 the GPR of the bank again increased at 42.6 0. Gross profit margin mainly serves as the source for paying additional expenses and future savings. Comparing this 3 years the graph shows that the ROI of Prime bank increased every year gradually and the rate of 2010 was the highest as because the interest income and gross profit of Prime bank both were highest in 2010

60

Operating Profit Margin

2010 2009 2008

Operating Profit Margin

29.7 %

26.5 %

25%

Operating Profit Margin

31% 30% 29% PERCENTAGE 28% 27% 26% 25% 24% 23% 22% Operating Profit Margin 2008 25% 2009 26.50% 2010 29.70%

Operating profit margin measure a company's pricing strategy and operating efficiency. The graph shows that the OPR of eastern bank was 25% in 2008 and in 2009 it slightly increased at 26.50% and gradually in 2010 the OPR was 29.70% and that was the highest rate among these 3 years as because the operating profit and interest rate both were also highest in 2010.

61

Net Profit Margin

2010 2009 2008

Net Profit Margin

34.7 %

23.3 %

15%

Net Profit Margin

40% 35% 30% PERCENTAGE 25% 20% 15% 10% 5% 0% Net Profit Margin 2008 15% 2009 23.30% 2010 34.70%

The Net Profit Margin measures how much out of every dollar of revenue a company actually keeps in earnings. In 2008 the NPM of eastern bank was 15% and in 2009 it increased at 23.30 % but in 2010 the rate again increased at 34.70%. The graph shows that the company was in its best position in 2010 and gradually improves its condition.

62

Total Asset Turnover

2010 2009 2008

Total Asset Turnover

0.085x

0.088x

0.096x

Total Asset Turnover

0.098 0.096 0.094 0.092 TIMES 0.09 0.088 0.086 0.084 0.082 0.08 0.078 Total Asset Turnover 2008 0.096 2009 0.088 2010 0.085

Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue. In 2008 the Total Asset Turnover of Prime bank was 0.096 and in 2009 it decreased at 0.088 and in 2010 the rate decreased at 0.085 .The graph shows that the rate of 2009 was the highest and the rate of 2010 was the lowest. Though the interest income and total asset of 2009 and 2008 was lower than the interest income and total asset of 2010, the difference between the interest income and total asset of 2010 is higher than the difference between the interest income and total asset of 2009 and 2008 thats why the rate of Total Asset Turnover of 2009 and 2010 was higher than 2010.

63

Inventory Turnover Ratio

2010 2009 2008

Inventory Turnover Ratio

5.52x

8.09x

8.61x

Inventory Turnover Ratio

10 9 8 7 TIMES 6 5 4 3 2 1 0 Inventory Turnover Ratio 2008 8.61 2009 8.09 2010 5.52

The inventory Turnover ratio showing how many times a company's inventory is sold and replaced over a period. . In 2008 the Inventory Turnover Ratio of Prime bank was 8.61 and in 2009 it decreased at 8.09 again in 2010 the rate decreased at 5.52.The graph shows that the rate of 2008 was the highest and the rate of 2010 was the lowest. The paid interest and the average inventory of 2010 was highest and the difference between the paid interest and the average inventory of 2010 is higher than the 2009 and 2008 thats why the ratio of Inventory Turnover of 2010 was lower than other 2 years.

64

Day Sales Outstanding

2010 2009 2008

Day Sales Outstanding

1455

1051

2728

Day Sales Outstanding

3000 2500 2000 DAYS 1500 1000 500 0 Day Sales Outstanding

2008 2728

2009 1051

2010 1455

Day sale outstanding measure the average number of days that a company takes to collect revenue after a sale has been made. Comparing the three years DSO, we find that DSO is highest in 2008 which was 2728 days. This is obviously not a good sign for the bank. That indicates the banks policy to collect receivables was not working properly. And they were unable to collect receivables properly. In this case, the bank was in a good position in year 2009 rather than year 2008 and 2010.

65

Prime Bank Limited

66

Company Background
History:
Established in April 1995 by a group of visionary entrepreneurs. Known for its superior service quality, Brand Image, strong corporate governance and corporate culture. Committed for excellence, Prime Bank is a top-tier bank in Bangladesh and reputed among regulators as distinctly compliant and among customers as agile and responsive to change. A Bank aligned to its vision, mission, values and strategic priorities.

Vision:
To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity.

Mission:
To build Prime Bank Limited into an efficient, market driven, customer focused institution with good corporate governance structure.Continuous improvement of our business policies, procedure and efficiency through integration of technology at all levels.

Core Business:
PBL focuses on a wide range of financial products and services which include commercial banking through both conventional and Islamic mode, Merchant and Investment Banking, SME & Retail banking, Credit Card and Off-shore Banking. It plays Leading Role in Syndicated Financing. It has expertise in Corporate credit and Trade Finance and made extensive market penetration with continuous growth in Corporate, Commercial and Trade Finance sectors. It has fully owned exchange houses at Singapore and UK focusing on remittance inflow to Bangladesh.

67

Major product and service offered: Retail Banking: Deposit Loans Cards Internet Banking SMS Banking Locker services Corporate Banking Product and services General Credit Unit Export Finance Unit Lease Finance Unit Islamic Banking Deposits Investment Foreign Trade SME Banking Sahaj Rin ( Easy Loan) Sampad Rin ( Capital Loan) Chalti Rin ( Working Capital Loan) Moushumi Rin ( Seasonal Loan) Digun RiN ( Double Loan) Anchol ( Women Entrepreneurs Loan) Agriculture Banking

NRB Banking Foreign Remittance Services Account Facilities for NRBs Banks Overseas Network Wire Transfer Fascilities Treasury Money Market Desk Asset Liability Management (ALM) Desk Foreign Exchange Desk

Offshore Banking

68

Ratio analysis of Prime Bank

Current Ratio
2010 2009 2008

Current Ratio

3.02x

3.35x

2.11x

Current Ratio
4 3.5 3 2.5 TIMES 2 1.5 1 0.5 0 Current Ratio 2008 2.11 2009 3.35 2010 3.02

In 2008, Current ratio was 2.11x and it has increased gradually in 2009 which was 3.35x. This indicates that the firm has properly managed their current assets as well as current liabilities. This determines their strong liquid position in the industry. But in 2010 the ratio decreased in 3.02. This incurred because the banks current liability increased than the last year.

69

Acid test/ Quick ratio

2010 2009 2008

Acid Test/ Quick Ratio

3.002x

3.33x

2.09x

Acid Test/ Quick Ratio

3.5 3 2.5 TIMES 2 1.5 1 0.5 0 Acid Test/ Quick Ratio 2008 2.09 2009 3.33 2010 3.002

In 2008, quick ratio of prime bank was 2.09x. In year 2009, the rate has increased by 3.33 and become 1x which really implies a better position in liquidity than previous years. But 2010 the ratio gradually decreased by 3.002. This happened because of their mismanagement of current liabilities. Our evaluation of the liquidity ratios suggests that Prime banks liquid position currently is fairly strong in the market but it was strongest in 2009

70

Debt/leverage ratio
2010 2009 2008

Debt/Leverage Ratio

89.02 %

90.5 %

93.9 %

Debt/Leverage Ratio
95.00% 94.00% 93.00% PERCENTAGE 92.00% 91.00% 90.00% 89.00% 88.00% 87.00% 86.00% Debt/Leverage Ratio 2008 93.90% 2009 90.50% 2010 89.02%

Debt Ratio of Prime Bank was 93.3% in 2008 and 90.5% in 2008 and then decrease to 89.2% in 2010. Among these three years the ratio of 2010 was lowest which indicates the asset of 2010 is higher than the debt of 2010 and also higher than the assets of previous years.

71

Profitability ratio o ROA(Return on Asset)

2010 2009 2008

Return On Asset

1.96 %

2.26%

1.13 %

Return on Asset
2.50% 2.00% PERCENTAGE

1.50%

1.00%

0.50%

0.00% Return on Asset

2008 1.13%

2009 2.26%

2010 1.96%

Return on assets of Prime Bank stood at 1.13% in 2008 and in 2009 it has increased at 2.26%.But in 2010 it has decreased at 1.96% This occurs because of net income. Net profit after tax was higher in 2009 comparing to 2008 and 2010. Thats why ROA was highest in year 2009

72

o ROE(Return on Equity)

2010

2009

2008

Return on Equity

17.9 %

27.33 %

18.61 %

Return on Equity
30.00% 25.00% PPERCENTAGE 20.00% 15.00% 10.00% 5.00% 0.00% Return on Equity

2008 18.61%

2009 27.33%

2010 17.90%

Return on equity of prime bank. Was 18.61% in 2008 which increased dramatically in 2009 and remains at 27.33% again in 2010 the ratio dramatically decreased at 17.9%. As we know that net income from 2008 to 2009 has increased the Net profit after tax was higher in 2009 and the total equity was also higher in 2009. Thats why in that year ROE is higher than other two years.

73

o ROI(Return on Investment)
2010 2009 2008

Return on Investment

2.28 %

2.1 %

1.26 %

Return on Investment
2.50% 2.00% PERCENTAGE

1.50%

1.00%

0.50%

0.00% Return on Investment

2008 1.26%

2009 2.10%

2010 2.28%

In 2008 the ROI was 1.26 then in 2009 it increased at 2.10 and again in 2010 gradually the ROI increased at 2.28. ROI evaluate the efficiency of an investment or compare the efficiency of a number of different investments. Comparing this 3 years ROI we can see that 2010 got the highest rate and the net income and investment both were highest in 2010 that means the efficiency of investments of Prime bank increased gradually day by day.

74

Gross Profit Margin

2010 2009 2008

Gross Profit Margin

35.2 %

22.35 %

21.72 %

Gross Profit Margin

40.00% 35.00% PERCENTAGE 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Gross Profit Margin 2008 21.72% 2009 22.35% 2010 35.20%

In 2008 the GPR of Prime bank was 21.72 and it slightly increased at 22.35 at 2009 but in 2010 the GPR of the bank dramatically increased at 35.20. . Gross profit margin mainly serves as the source for paying additional expenses and future savings. Comparing this 3 years the graph shows that the ROI of Prime bank increased every year gradually and the rate of 2010 was the highest as because the interest income and gross profit of Prime bank both were highest in 2010

75

Operating profit margin

2010 2009 2008

Operating Profit Margin

80.5 %

76.11 %

63.89 %

Operating Profit Margin

90.00% 80.00% 70.00% PERCENTAGE 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Operating Profit Margin 2008 63.89% 2009 76.11% 2010 80.50%

Operating profit margin measures a company's pricing strategy and operating efficiency. The graph shows that the OPR of Prime bank was 63.89 in 2008 and in 2009 it increased at 76.11 and gradually in 2010 the OPR was 2010 and that was the highest rate among these 3 years as because the operating profit and interest rate both were also highest in 2010.

76

Net profit margin

2010 2009 2008

Net Profit Margin

24.9 %

25.64 %

13.7 %

Net Profit Margin

30.00% 25.00% PERCENTAGE 20.00% 15.00% 10.00% 5.00% 0.00% Net Profit Margin

2008 13.70%

2009 25.64%

2010 24.90%

In 2008 the NPM of Prime bank was 13.70% and in 2009 it increased at 25.64% but in 2010 the rate slightly decreased at 24.90%. The graph shows that the rate of 2009 was the highest. Though the interest income and net profit of 2009 was lower than the interest income and net profit of 2010, the difference between the interest income and net profit of 2010 is higher than the difference between the interest income and net profit of 2009 and thats why the rate of Net Profit Margin of 2009 is higher than 2010.

77

Total asset turnover

2010 2009 2008

Total Asset Turnover

0.078x

0.086x

0.082x

Total Asset Trunover

0.088 0.086 0.084 TIMES 0.082 0.08 0.078 0.076 0.074 Total Asset Trunover 2008 0.082 2009 0.086 2010 0.078

In 2008 the Total Asset Turnover of Prime bank was 0.082 and in 2009 it increased at 0.086 but in 2010 the rat decreased at 0.078. Though the interest income and total asset of 2009 and 2008 was lower than the interest income and total asset of 2010, the difference between the interest income and total asset of 2009 and 2008 thats why the rate of Total Asset Turnover of 2009 and 2010 was higher than 2010.

78

Inventory Turnover Ratio

2010 2009 2008

Inventory Turnover Ratio

6.14x

9.13x

9.47x

Inventory Trunover Ratio

10 9 8 TIMES 7 6 5 4 3 2 1 0 Inventory Trunover Ratio 2008 9.47 2009 9.13 2010 6.14

In 2008 the Inventory Turnover Ratio of Prime bank was 9.47 and in 2009 it increased at 9.13 but in 2010 the rate decreased at 6.14. The graph shows that the rate of 2008 was the highest and the rate of 2010 was the lowest. The paid interest and the average inventory of 2010 was highest and the difference between the paid interest and the average inventory of 2010 is higher than the 2009 and 2008 thats why the ratio of Inventory Turnover of 2010 was lower than other 2 years

79

Day sales outstanding

2010 2009 2008

Day Sales Outstanding

3328

2966

2974

Day Sales Outstanding

3400 3300 3200 DAYS 3100 3000 2900 2800 2700 Day Sales Outstanding 2008 2974 2009 2966 2010 3328

Day sale outstanding measure the average number of days that a company takes to collect revenue after a sale has been made. Comparing the three years DSO, we find that DSO is highest in 2010 which was 3328 days. This is obviously not a good sign for the bank. That indicates the banks policy to collect receivables was not working properly. And they were unable to collect receivables properly. In this case, the bank was in a good position in year 2009 and 2008.

80

Recommendations
As we observe that there were so many problems in their operations, we are recommending them to improve their performance in the next year and gain much profit. We are recommending for all of the banks at once. Turnover inventory as quickly as possible without stock outs the results in lost sales. Collect Accounts receivables as soon as possible without losing the sales from high pressure collection business. Manage mail, processing and clearing time to reduce then when collecting from customers and to increase them when paying suppliers. Pay accounts payable as soon as possible without damaging the firms credit rating. The firm should improve their policy for collecting accounts receivable. For that they can change their credit standards. They should monitor their credit terms daily so that they can review the customers are paying properly. For that they can use information system in their business. The manager should concentrate on the operational efficiency so that the cost should be minimized. And previously we learnt how cost can be minimized and profit can be boost up. The assets should be efficiently use as much as possible to generate the sales and they should also use debt capital to magnify the shareholders returns. And last of all to increase their shareholders equity they should take some necessary steps as we have said above. Should follow prudent asset liability management Should use new, upgraded & modern banking software.

81

Conclusion:
With wide customer base banking Bank Asia, Dutch Bangla Bank , Eastern Bank ad Prime Bank established themselves as the Market Leader among the conventional private commercial banks for deposit and advances. Those are the well known banks in the private commercial banks in our country. Though their operations are exposed to the waves of ups and downs in the international market as well as in the local market due to the downward share market. The company passed through and inched ahead with the increased turnover. As the share market suddenly fall they faced same serious problems in handling operations. All these reflect in the financial statement and analysis. By observing all kinds of ratios and analysis we have found these four private banks are the four powerful private banks in our country and their superior service quality, strong corporate governance have given them an Excellent Brand Image. But for the changing nature of the economy it has faced some problems regarding its management activities in the last few years. To continue to reinforce the Brand, these banks are continuously improving its customer service, corporate governance and CSR activities by remaining innovative and caring and if they can solve those problems they can hold the position of leading bank in this banking industry in future.

82

Reference
1. www.Wikipedia.com 2. www.Investopedia.com 3. www.bankasia-bd.com/ 4. www.dutchbanglabank.com/ 5. www.ebl.com.bd/ 6. www.primebank.com.bd/