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Introduction

Background of the Report:

The report is based on the analysis of the financial statements of Prime Bank Ltd, Premier Bank Ltd, in

Bangladesh. The purpose of this report is to analyze the financial statements and get an in-depth

understanding of the operations of the banking corporations from different perspectives.

In this report I have tried to analysis of the financial statements primarily based on the data. published in

the annual reports of the year 2006, 2007, 2008 and 2009 of the following two Banks situated in

Bangladesh.

Prime bank Ltd.

Premier bank Ltd.

Purposes of analysis:

Through this analysis work I tried to know how a bank evaluates their performance and also compare

their performance with the other bank. To evaluate the performance I need to calculate different ratios, so

by doing this entire thing we can learn to find out different ratio a bank need, what are the elements abank needs to calculate different ratio. Also we can be familiar with the banks operation and different task a

bank carry out, what are the different services offered by the bank. By taking knowledge from this entire thing

we can apply it to real world in our practical life. Our main objective of conducting this report is to evaluate

the performance of the Prime Bank Ltd, Premier Bank Ltd.

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Historical Background of the Banks

The Prime Bank Limited being a Banking Company has been registered under the Companies

Act 1994 with its Registered Office at 119-120 Motijheel C/A, Dhaka-1000.

The Bank operates as a Scheduled Bank under a Banking license issued by Bangladesh Bank, the

Central Bank of the country.

History:

In the backdrop of economic liberalization and financial sector reforms a group of highly

successful local entrepreneurs conceived an idea of floating a commercial bank with different

outlook. For them, it was competence, excellence and consistent delivery of reliable service with

superior value products. Accordingly, Prime Bank Ltd was created and commencement of

business started on 17th April 1995. The sponsors are reputed personalities in the field of trade

and commerce and their stake ranges from shipping to textile and finance to energy etc.

As a fully licensed commercial bank, Prime Bank Ltd, is being managed by a highly professional

and dedicated team with long experience in banking. They constantly focus on understanding

and anticipating customer needs. As the banking scenario undergoes changes so is the bank and it

repositions itself in the changed market condition.

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accepted CAMEL rating. The bank has already occupied an enviable position among its

competitors after achieving success in all areas of business operation.

Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking services

covering all segments of society within the framework of Banking Company Act and rules and

regulations laid down by our central bank. Diversificat ion of products and services include

Corporate Banking, Retail Banking and Consumer Banking right front to agriculture,

and real state to software.

The bank has consistently turned over good returns on Assets and Capital. During the year 2005,

the bank has posted an operating profit of TU520.34 million and its capital funds stood at

TU ) 177.32 million. Out of this, Tk.1400 mi llion consists of paid up capital by shareholders and

Tk.1777.32 million represents reserves and retained earnings. The ba nk's current capital

adequacy ratio of 9.96% is in the market. In spite of complex business environment and default

culture, quantum of classified loan in the bank is very insignificant and stood at less than 0.96%.

Prime Bank Ltd., since its beginning has attached more importance in technology integration. In

order to retain competitive edge, investment in technology is always a top agenda and under

constant focus. Keeping the network within a reasonable limit, our strategy is to serve the

customers through capacity building across multi delivery channels. Our past performance gives an

indication of our strength. We are better placed and poised to take our customers through fast

changing times and enable them compete more effectively in the market they operate.

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History:

The Premier Bank Ltd Constricted under A scheduled Commercial Bank incorporated on June

10, 1999 as Public Limited Company under companies act, 1994 and Bank companies act, 1991.

The Premier Bank Limited is incorporated in Bangladesh as banking company on June 10, 1999

under Companies Act.1994. Bangladesh Bank, the central bank of Bangladesh, issued banking

license on June 17, 1999 under Banking Companies Act. 199 1. The Head Office of the Premier

Bank Limited is located at Banani, one of the fast growing commercial and business areas of

Dhaka city.

Vision of the Bank:

The Bank has clear vision towards its ultimate destiny - to be the best amongst the top financial

institutions.

Missions of the Bank:

1. To be the most caring and customer friendly provider of financial services, creating

opportunities for more people in more places.

2. To ensure stability and sound growth whilst enhancing the value of shareholders

investments.

3. To aggressively adopt technology at all levels of operations to improve efficiency

and reduce cost per transaction.

4. To ensure a high level of transparency and ethical standards in all business transacted

by the Bank.

5. To provide congenial atmosphere which will attract competent work force who will

be proud and eager to work for the Bank.

6. To be socially responsible and strive to uplift the quality of life by making effective

contribution to national development.

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Our Values:

Service First

For us Service First' is not just an abstraction; we do mean it. It holds a prime and central focus

in our operation. We believe, discharge of quick & quality service is the hallmark for banking

standard.

Easier Banking

We have make day-to-day banking easier than ever through state of the art facilities. We tend to

create a congenial atmosphere for our customers to feel free and go easy with banking. We divide

our clientage into least possible individuals to impart the best attention, and we tailor made our

services to meet special needs.

Better Relationship

As we foam bondage with our valued clients, so we develop it into a sustainable end. A good

understanding with them, while carrying out business transactions, helps us perceive their goals

and thus, enable us to respond pro-actively to their financial needs.

Assured Confidentiality

Since we deal in business in the form of financial loss or gain, our solemn promise remains intact

with interest of our clients so much so that all banking transactions are done in a confidential &

professional manner.

Good Corporate Governance

The board of bank ensures that high ethical standards are established across the Bank and regularly

reviews the Bank's compliance with Central Bank. The board recognizes good corporate governance

practice a vital ingredient in the creation of substantial shareholders value and protecting the

interests of all stakeholders.

Corporate Citizenship

We are compliant Bank and we pay due taxes. We are going green to protect our planet from

environmental hazards. We are eager to inspire eco-friendly investment. We are an abiding citizen

in terms of all laws, rules, norms, sentiments and values of the land.

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Product and Service offered by the Bank

Deposit Scheme:

Bank is the largest mobilize of surplus domestic savings. For poverty alleviation, we need self

employment, for self-employment we need investment and for investment we need savings. In

the other words, savings help capital formations and the capital formations help investments in

the country. The investment in its turn helps industrialization leading towards creation of

wealth of the country. And the wealth finally takes the country on road to progress and

prosperity. As such, savings is considered the very basis of prosperity of the country. The more

the growth of savings, the more will be the prosperity of the nation,

The savings rate in Bangladesh is one of the lowest in the world rate of domestic saving being

17.78 %. In order to improve the savings rate, Financial Institutions responsible for

mobilization of savings should offer attractive Savings Schemes so that the marginal

propensity to save increases. The savings do not, of course, depend only on the quantum of

income but largely depend on the habit of savings of the people.

Interest rate ofSavings Deposit is 5.50%.

We have formulated the following Savings Schemes

01. Contributory Service Scheme

02. Education Savings Scheme

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3. Short Term Deposit Scheme

4. Double Benefit Deposit Scheme

5. Resident Foreign Currency Deposit Account

6. Non-Resident Taka Account

7. House Building Deposit Scheme

8. Monthly Benefit Deposit Scheme

9. Fixed Deposit Scheme

10.Lackphoti Deposit Scheme

11.Foreign Currency Account

3. Non-Resident Currency Deposit Account

4. Non-Resident Investors Taka Account

5. Prime Millionaire Scheme

Loan Scheme:

1. Lease Finance

2. House Building/Apartment Loan Scheme

3. Small And Medium Enterprise (SME)

4. Retail Loan Products

Hire Purchase

5. Advance Against Share

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Islamic Mode of Operation:

Prime Bank Limited has started its operation as a Conventional Bank in April 1995. But pretty

soon afterwards, within few months, the Bank has taken up the Challenge to start Islamic Banking

Operations. The Challenge is not so much as in operating Islamic Banking but in maintaining

both the forms in Parallel. From its inception as an Islamic Bank the bank has proven itself to be

worthy of its slogan of 'Bank with a difference', through successful operation of Islamic

Banking.

Prime Bank has started its Islamic Banking operation through its first Branch being inaugurated at

19, Dilkusha C/A, Dhaka on 18 December 1995. Since then it has so far has established four

more branches at different locations in the Country. Because of its popularity and management's

commitment toward social well being gradual expansion of Prime Bank's Islamic Banking

operations is assured. Following are the salient features of Islamic Banking, as is practiced in

Prime Bank Limited:

1. All activities are conducted according to Islamic Shariah.

2. Interest free monetary operations.

3. Building partnership relation between the Bank and its customers.

4. Following Islamic principles in its investment portfolio.

5. While investing special consideration to social needs is given.

1. Through small and long term deposit schemes providing hope to the poor income group of

the society.

1. Client service centric banking, through which making the clients feel special.

Conduct welfare activates etc.

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Service Portfolio:

Prime Bank Limited provides following services under Islamic Banking:

1. Deposit

1. Investment

2. Foreign Trade

1. Remittance and Fund Transfer

Weight age Principle in Distributing Profit to the Depositors:

Deposit ofDeposit Types Weight age Final rate of profit for 20051. Mudaraba saving deposite 0.75 6.252. M udaraba Short Term Deposi ts 0;52 4.15%, - 5. 15%3. Mudaraba-Tarm. Deposits for 36 month 1.00 8.60%-10.75%4. Mudaraba Term Deposits for 24 month 0.98 8.60%-10.75%5.

Mudaraba term deposits for 1 2 m o n t h 0 96 8.60%-10.75%6. mudaraba term. Deposits for 6 month 0.92 7.85%-10.50%7. mudaraba term. Deposits for 3 month 0.88 7.60%-10.50%8. Mudaraba Contributory Savings scheme 1.05 9.00% - 9.15%9. Mudaraba monthly profit deposits scheme 1.02 9.00%-9.15%

10. Muda'raba Education saving scheme 1.20 10.75%-11.25%11.

Mudaraba Hajj Savings Scheme 1.20 9.00%-9.15%12. Mudaraba Special deposit scheme 1.05 9.00%-9.50%13. Lakphoti deposit scheme 1.05 9.00%-9.50%

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Islamic Banking Operation:

Islamic Banking system has now-a-days become a reality all over the world. It is widely accepted

and liked not only by the Muslims but also Non Muslims. The Premier Bank Limited has

launched Islamic Banking Operation through its two (2) branches:

1. Islamic Banking Branch, Mohakhali, Dhaka.

2. Islamic Banking Branch, Laldighirpar, Sylhet.

In order to ensure smooth operation of Islamic Banking and proper guideline, the Bank has a

Shariah Council consisting of renowned Scholars, Alem, Faqih, Lawyer, Islamic Banker and

Philosopher. You can get Islamic Banking Services from any Branches of the Bank through

"Islamic Banking Help Desk" as exist at every conventional Branch.

Deposit Products of Islamic Banking

Al-Wadiah Current Account

Mudaraba Savings Account (MSA)

Mudaraba Term Deposit Receipt (MTDR)

Mudaraba Special Notice Deposit Account (MSNDA)

Mudaraba Premier 50+ Account

Mudaraba Premier Genius Account

Mudaraba Monthly Savings Scheme (MMSS)

Mudaraba Monthly Income Scheme (MMIS)

Mudaraba Education Savings Scheme (MESS)

Mudaraba Special Deposit Scheme (MSDS)

Mudaraba Double Benefit Scheme (MDBS)

Mudaraba Hajj Saving Scheme (MMSS)

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Note: The benefit amount from these deposit products can vary depending on the overall

Profit loss and the weight age.

Investment Schemes of Islamic Banking Different Investment Schemes of our Islamic Banking

Operation may be categorized under three basic parts. They are as follows:

Buying-Selling Mode

(a) Bai Murabaha (Sale in cash or differently),

(b) Bai Muajjal (Sale under deferred payment),

(c) Bai Salam (Advance Purchase),

(d) Bai Istisna (Progressive Financing)

Sharing Mode

(a) Murabaha (Sharing),

(b) Musharaka (Partnership)

Leasing or Ijara

(a) Leasing where the Teaser (Bank) retains ownership of the assets and the lessee (client)

possesses the right to use the assets on payment of specified rent over a period.

(a) Hire-purchase under Shirk at Al-Milks: Under this system, the bank finances to purchase the

machineries, equipments, consumers' durables etc. under a joint ownership agreement subject to

ownership ratio as per equity.

Following Investment products are conducted under the Islamic Banking System:

Consumer Investment Scheme

Housing Investment/Apartment Finance

Doctors' investment Scheme

Rural Investment Scheme

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SME Investment

Women Entrepreneur Investment Scheme

Lease Finance Project Finance

Student's Investment Scheme

Premier SMS Services:

Premier Bank launched Premier SMS (SMS. Banking Service) on 30 January 2006 at Pan Pacific

Sonargaon Hotel, Dhaka.

Meet the instant e-Age banking tool

In today's business environment, with so many deadlines to fulfill, appointments to meet and

meetings to attend, you are hard pressed for time. Don't you wish you could do all your

important activities while travelling from one meeting to another? As a leading private sector

bank in Bangladesh, The Premier Bank Limited presents SMS Banking Service. Now you can be

informed about banking transactions and inquiries through our SMS Banking service.

You can check your balance, stop a cheque payment, or even get your statements. Our SMS

Banking service provides you with real time account inform_oration management by using mobile

phones and instruction capabilities from the mobile phones at a true "anywhere, anytime,

anyhow" convenience.

SMS (Short Message Service) Banking is one of the modem banking features. This is the most

convenient, low-cost and quickest way for banking. The service is available round the clock

seven days a week.

Premier Bank SMS Banking brings your bank accounts to your fingertips. It works using Short

Messaging Service (SMS) technology. Finally, an account that travels with you, anywhere you

go!

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Deposits:

Savings Account (SB)We offer competitive interest rate (6.00% Ra) on our Savings Account. In

addition, all account holders will get VISA Debit Card and ATM facility for 24 hour banking

convenience. Current Account (CD)Our Current Account is probably the most useful Bank

Account you will ever have for daily transaction. It is a non-interest bearing cheque account. It

will save you the hassle of carrying around cash every month. Special Notice Deposit Account

(SND) Any individuals or corporate bodies, pan open Special Notice deposit Account for short

time period. However, 7 days notice is required to withdraw money from this account with

attractive interest which is as follows:

TK.

TK. I Core & TK. 25 Core & TK. 50 Core & 100

Less than TK. Above but Less than Above but Less than Above but Less than Core

1 Core TK. 25 Core TK. 50 Core TK. 100 Core &

Above

5.00i4.00% P.a 4.25% P.a '4.50% P.a 4.75% P.a5.00a P.a

Premier 50+ Account Ifyou are above fifty years of age, you will appreciate our unique Premier

50+ Account with a number of extra benefits such as higher rate of interest (5.75% P.a) on daily

closing balance, priority service and no service charge. The Account is exclusively developed for

the senior citizens of the country. Premier Genius Account Intellect and perseverance will lead

you to success and saving will guide you to an enriched future. Premier Bank Genius Account

offers students, who are18 years and above, easy and modem banking facilities. Wherever your

possibility may lie, be it in the country or abroad, Premier Bank will always be beside you as you

build your future. Genius Account offers you h ighest profit on daily closing balance (5,751/'0' P.a),

Discount on VISA Debit Card and other attractive facilities. Foreign Currency (FC) Account

Foreign Currency Account can be opened at any of our authorized dealer (AD) Branches. We

offer number of foreign currency accounts such as Resident Foreign Currency Deposit (RECD)

and Non Resident Foreign Currency Deposit (NFCD) Accounts, Other account includes

Convertible Taka Account Natick is an account in Taka and the account holder has the option to

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convert Taka into foreign currency and vice versa. Fixed Deposit (FDR)Our Fixed Deposit

(FDR) is meant for those investors who want to deposit a lump sum of money for a fixed time

period, say for a minimum period of 30 days to 1 year and above, thereby earning a higher rate

of interest in return. The prevailing rates of interest are shown below:

Amount

For Any~Amount

Effective,1=>

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(~k00.00 or multiples6 years 10000.00 or multiples (Tk.) 2011-03-16

Education Savings Scheme Do not compromise with the future of your children. Why not start

Saving from now to meet the educational expense of your children in future? This scheme

has been designed to secure future educational expenses of your children.

Installment

(T K)

2000.00

3000.00

4000.00

5000.00

5 years 8 years 10 years 12 years

Amount at Amount at 'Amount at Amount at

Maturity (TK) Maturity (TK) Maturity (TK) Maturity (TK)

75850.00 139000.00 190000.00 253500.00

150500.00 278000.00 380000.00 490000.00

226500.00 416500.00 573500.00 760500.00

302000.00 560000.00 1005000.00

377000.00 694500.00 960000.00 1267000.00

EffectiveDate

2009-06-

08

2009-06-

08

2009-06-

08

2009-06-

08

2009-06-

Loan Products:

Personal Loan

Our Personal Loan is an) , purpose loan for you. The purpose could be an ything valid from

buying household appliances to emergency of

agency medical needs. Some of these could be: Purchase o17, Electronic goods, House/Office

Renovation, Marriages in the family, Advance Rent Payments, Travel Expenses and Payment of

Taxes etc. This product is best suited for salaried executives who are working as confirmed

employees in established organizations

Consumer Credit Scheme

We have introduced Consumer Credit Scheme to extend credit facilities to limited and fixed

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income group to improve their standard of living. The loan is repayable in easy equal monthly

installments (EMI) stretching from 12 to 60 installments.

Housing Loan

Realizing the importance of having one's own place to live, we have introduced Housing Loan at

a competitive interest rate. We provide this loan for both residential and commercial purposes.

Doctors' Loan

This scheme is designed to financially assist registered Doctors & Medical Practitioners for

availing up to 100% finance for Medical Equipment. Motor Car, Ambulance etc. Loan for rental

advance for Chamber, Office Decoration are also available under this loan scheme. Registered

Doctors & Medical Practitioners, Eye Specialists, Heart Specialists, Child Specialists, Surgeon,

Dentist are eligible for this loan. Also Hospitals, Clinics and Diagnostic Centers owned &

Eligible Diagnostic

Operated by the registered Doctors may apply for this loan.

Small & Medium Entrepreneur (SME) Finance

Bangladesh, as a developing country, has been trying for its overall economic growth. The

development of small and medium enterprises would be the key element in this regard.

Recognizing this fact, we have strongly started to finance SMEs. Our SME products are- Project

Finance, Working Capital Finance, Lease Finance/Hire Purchase, Work Order Finance, etc.

Women Entrepreneur Finance (WEF)

Women Entrepreneurs Finance is an asset product offered to women entrepreneurs to expand

their businesses. As the name implies, this scheme is exclusively tailored for women in

businesses to give them extra edge and success viz a viz to meet their financial freedom through

their innovative entrepreneurship. This is more than a loan, a financing Solution for their

businesses.

Lease Finance / Hire Purchase

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We offer Lease Finance/Hire Purchase to facilitate your funding requirement for the procurement of

assets in order to grow your business. Meet up financial need without out flowing own fund. You

can acquire the lease assets keeping your capital intact. Thus, leasing helps to build up your fund

raising capacity. Premier Bank offers Lease Finance for Capital Machinery, Medical

Equipment/Office Equipment, Heavy Construction Equipment, Lifts, Elevators, Power Generators,Air

Conditioners, Machinery for Agro based Industry etc.

Rural Credit Scheme

The Premier Bank Limited is determined to extend credit facilities to the people at village level. Rural

Credit Scheme is a short term loan for maximum one year targeted to the lower income group of

the rural area. The loan is given for Poultry: Layer or Broiler, Agro-based handicrafts, Ricehusking,

Purchase of SewingMachine, Grocery Shop etc.

Student Credit Programmed

We are proud to introduce a credit scheme which is being first of its kind whereby the

meritorious students in the country shall enjoy credit facility in each month to defray educational

expenses. The loan is to be disbursed in a lump sum amount or as monthly installments basis

where necessary. Parents/guardian may apply along with estimate of education expense in a

prescribed form to any branches of the Bank duly recommended by the Head of the Department or

Head of the Education Institution.

VISA Credit Card (Local & International)

Our VISA International Credit Card is accepted globally and VISA Local Credit Card is

accepted at more than 3500 outlets across the country. You will get free credit facility up to 45

days without any interest. You can draw cash up to 50% of the credit limit of local Visa C%d,

You can also pay only 5% of your bil l ing amount every month. You may apply for

supplementary Cards for any person over 18 years of age. If you lose your card, you just inform

the Premier Bank Card Division without any delay and you will be protected against misuse of

t h e C a r d . R a t e s a n d o t h e r f a c i l i t i e s a r e h i g h l y c o m p e t i t i v e i n t h e m a r k e t .

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Loan General & Other Business Financing Solutions

We offer other financing solutions under Agriculture Finance, Project Finance, Working Capital

Finance, Export Finance, Trade Finance, Syndicated loan and Term Loan. We also offer Cash

Credit (Hypo), SOD, PAD, LTR, IBP, Export Cash Credit, Packing Credit and more to meetyour business financial requirements.

International Services:

The International Division is looking after Correspondent Banking Relationships, Treasury Back

Office and International Trade Settlement. In order to smooth global operation of international

business we have correspondent banking relationship with 430 foreign banks around the globe

and maintain 19 Nostro accounts in 9 currencies to service our customers. Bank is providing the

facility of Letters of Credit, handling of Import Bills, issue of Shipping Guarantees, acceptance

of Bills, financing of Imports. Advising of Export Letters of Credit, Confirmation of Letters of

Credit, Assistance in preparation of Export documents, Negotiation of Letters of Credit,

Handling Export bills on Collections, Purchase/Discount of Export bills, Pre-shipment facilities

are extended for both domestic and foreign trade. The requirement of letters of guarantee, Bid

Bonds, Performance Bonds, Advance Payment Bonds for infrastructure projects in Bangladesh,

participating in tenders or any other need basis, could. be channeled through us for speedy

delivery at competitive tariffs.

Theoretical Review of the Ratio:

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Return On Assets ROA:

An indicator of how profitable a company is relative to its to tal 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:

Net Income

Total Assets

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.

The assets of the company are comprised of both debt and equity. Both of these types of financing

are used to fund the operations of the company. The ROA figure gives investors an idea of how

effectively the company is converting the money it has to invest into net income. The higher the

ROA number, the better, because the company is earning more money on less investment. For

example, if on,-, company has a net income of$ I million and total assets of $5

Million, its ROA is 20%, however, if another company earns the same amount but has total assets of

$10 million, it has an ROA of 10%. Based on this example, the first company is better at

converting its investment into profit.. When you really think about it, management's most important

job is to make wise choices in allocating its resources. Anybody can make a profit by throwing a tonof money at a problem, but very few managers excel at making large profits with little investment.

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other opportunities with a higher ROI, then the investment should be not be undertaken.

Keep in mind that the calculation for return on investment and, therefore the definition, can be

modified to suit the situation -it all depends on what you include us returns and costs. The

definition of the term in the broadest sense just attempts to measure the profitability of an

investment and, as such, there is no one "right" calculation.

For example, a marketer may compare two different products by dividing the gross profit that each

product has generated by its respective marketing expenses. A financial analyst, however, may

compare the same two products, using an entirely different ROI calculation, perhaps by

dividing the net income of an investment by the total value of all resources that have been

employed to make and sell the product.

This flexibility has a downside, as ROI calculations can be easily manipulated to suit the user's

purposes, and the result can be expressed in many different ways. When using this metric, make sure

you understand what inputs are being used.

Current Ratio:

Liquidity ratio that measures a company's ability to pay short-term obligations.

The Current Ratio formula is:

4 Current Ratio - Current AssetsCurrent Liabilities

Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".

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 I 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

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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 longinventory 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.

This ratio is similar to the acid-test ratio except that the acid-test ratio does not include inventory and

prepaid as assets that can be liquidated. The components of current ratio (current assets and current

liabilities) can be used to derive working capital (difference between current assets and current

liabilities). Working capital is frequently used to derive the working capital ratio, which is working

capital as a ratio of sales.

Quick Ratio:

An indicator of a company's short-term liquidity, The quick ratio measures a company's ability to

meet its short-term obligations with its most liquid assets. The higher the quick ratio, The better the

position of the company.

The quick ratio is calculated as:

Current assets- Inventories

Current Liabilities

Also known as the "acid-test ratio" or the "quick assets ratio".

The quick ratio is more conservative than the current ratio, a more well-known liquidity measure,

because it excludes inventory from current assets. Inventory is excluded because some

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companies have difficulty turning their inventory into cash. In the event that short-term obligations

need to be paid off immediately, there are situations in which the current ratio would overestimate a

company's short-teen financial strength.

Debt/Equity Ratio:

A measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is

using to finance its assets.

Total Liabilities

Shareholders Equity

Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the

calculation.

Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal financial

statements as well as corporate ones.

A high debt/equity ratio generally means that a company has been aggressive in financingits

growth with debt. This can result in volatile earnings as a. result of the additional interest

expense.

If a lot of debt is used to finance increased operations (high debt to equity), the company could

potentially generate more earnings than it would have without this outside financing, If this were to

increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as

more earnings are being spread among the same amount of shareholders. However, tht

cost of this debt financing may outweigh the return that the company generates on the debt

through investment and business activities and become too much for the company to handle.

This can lead to bankruptcy, which would leave shareholders with nothing.

The debt/equity ratio also depends on the industry in which the company operates. For example,

capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2,

while personal computer companies have a debt/equity of under 0.5.

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Profit Margin:

Profit margin, net margin, net profit margin ornet profit ratio all refer to a measure of

profitability, It is calculated by finding the net profit as a percentage of the revenue.

Profit Margin = Earnings before Interest and Tax / Revenue

The profit margin is mostly used for internal comparison. It is difficult to accurately compare the net

profit ratio for different entities. Individual businesses' operating and financing arrangements vary so

much that different entities are bound to have different levels of expenditure, so that comparison of

one with another can have little meaning. A low profit margin indicates a low margin of safety: higher

risk that a decline in sales will erase profits and result in a net loss, or a negative margin.

Profit margin is an indicator of a company's pricing strategies and how well it controls costs.

Differences in competitive strategy and product mix cause the profit margin to vary among

different companies.

Gross Profit Margin: !nA 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.

Also known as "Gross margin".

Calculated as:

Where:

COGS = Cost of Goods Sold

For example, suppose that ABC Corp. earned $20 million in revenue from producing widgets and

incurred $10 million in COGS-related expense. ABC's gross profit margin would be 50%. This means

that for every dollar that ABC earns on widgets, it really has only $0.50 at the end of the day.

This metric can be used to compare a company with its competitors. More efficient companies willusually see higher profit margins.

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Earnings Per Share EPS:

The portion of a company's profit allocated to each outstanding share of common stock. Earnings

per share serve as an indicator of a company's profitability.

Calculated as:

Net Income - Dividends on Preferred Stock

Average Outstanding Shares

When calculating, it is more accurate to use a weighted average number of shares outstanding

over the reporting term, because the number of shares outstanding can change over time.

However, data sources sometimes simplify the calculation by using the number of shares

outstanding at the end of the period.

Diluted EPS expands on basic EPS by including the shares of convertibles or

warrants outstanding in the outstanding shares nu

Dividend per Share DPS:

The sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the

total dividends paid out over an entire year (including interim dividends but not including special

dividends) divided by the number of outstanding ordinary shares issued.

DPS can be calculated by using the following formula:

DPS = Dividend available for current shareholder / No. of common stock

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Dividends per share are usually easily found on quote pages as the dividend paid in the most recent

quarter which is then used to calculate the dividend yield. Dividends over the entire year (not

including any special dividends) must be added together for a proper calculation of DPS, including

interim dividends. Special dividends are dividends which are only expected to be issued once so are

not included. The total number of ordinary shares outstanding is sometimes calculated using the

weighted average over the reporting period.

P/E ratio:

The P/E ratio (price-to-earnings ratio) of a stock (also called its 'RE", or simply "multiple") is a

measure of the price paid for a share relative to the annual net income or profit earned by the firm per

share. t2 I The P/E ratio can therefore alternatively be calculated by dividing the company's

market capitalization by its total annual earnings.

The P/E ratio is defined as:

Price per -shear

P/ E ratio =Annual earning per -shear

Earnings yield:

The reverse (or reciprocal) of the P/E is the E/P, also known as the earnings yield. The earnings

yield is quoted as a percentage, and is useful in comparing a stock, sector, or the market's valuation

relative to bonds.

The earnings yield is also the cost to a publicly traded company of raising expansion capital

through the issuance of stock. Its computed as (EARNINGS PER SHARE/MARKET PRICE PER

SHARE)

Price/dividend ratio:

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Publicly traded companies often make periodic quarterly or yearly cash payments to then-

Owners, the shareholders, in direct proportion to the number of shares held. According to US law,such payments can only be made out of current earnings or out of reserves (earnings retained from

previous years). The company decides on the total payment and this is divided by the number of

shares. The resulting dividend is an amount of cash pershare.

Just as P/E is the ratio of price to earnings, the Price/Dividend ratio is the ratio of price to

dividend.

Dividend yield:

The dividend yield is the dividend paid in the last accounting year divided by the current share

price: it is the reciprocal of the Price/Dividend ratio.

If a stock paid out $5 per share in cash dividends to its shareholders last year, and its price is

currently $50, then it has a dividend yield of 10%.

Historically, stocks with very high P/E ratios pay little if any dividends. Theoretically speaking, if

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the dividend exceeds the earnings, the company may be seen as returning capital to its investors, a

situation that can not persist indefinitely.

Return on Asset (ROA):

Not Income

Tota l Assets

2006 2007 2008 2009

Prime bank Ltd. 2.05 1.19 1.30 2.37

Premier bank Ltd. 1.36 .24 1.68 2.30

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By considering ROA, the best performance in 2006 was Prime bank ltd , And in 2009 is prime bank

Return on Equity (ROE):

Return on Equity = Net Income/Shareholder's Equity

2006 2007 2008 2009

Prime bank Ltd. 31.55 30.68 20.58 30.19

Premier bank Ltd, 22.67 3.19 20.88 23.47

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By considering ROE, the best performance in 2009 isprime bark

Current ratio:

Current Ratio Current Assets sets

Current Liabilities

2006 2007 2008 2009

Prime bank Ltd. 42.09 23.29 28.3 35.84

Premier bank Ltd. 86.06 88.61 73.69 6.10

By Considering Current Ratio, in 2006 2007 and 2008 the highest performance done by

Premier Bank ltd

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Debt equity ratio:

Total Liabilities

Shareholders Equity

2006 2007 2008 2009

Prime bank Ltd. 147.7 140.9 154.7 959.00

Premier bank Ltd. 157.00 122.1 114.20 910.70

By considering Debt equity ratio in 2009 Prime banks debt equity ratio is higher then other

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