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Virtual University of Pakistan
Evaluation Sheet for Internship Report
Spring 2011
FINI619: Internship Report (Finance) Credit Hours: 3
Name of Student: Muhammad Afaaq
Student’s ID: MC090400284
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Evaluation Criteria ResultReport writing PassPresentation & Viva voceFinal Result
1
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Finance (FINI-619)
Internship report of National Bank of Pakistan
1. Title Page: Name of the organization: National Bank of Pakistan
Name of the Internee: Muhammad Afaaq
Student ID: MC090400284
Session: 2009 - 2011
Submission date of the internship report: 07-07-2011
Name of the University: Virtual University of Pakistan
VU logo:
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2. Letter of Undertaking
3. Scanned copy of the internship certificate
(provided by the organization)
4. Dedication
At first dedicating this work to Almighty ALLAH, without his mercy and sympathy
I was not able to accomplish this work Almighty ALLAH gave me power and
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confidence to done my internship and also HOLY PROPHET HAZARAT
MUHAMMAD (Peace be upon him) who is a light for humanity. I also dedicate this
work to my lovely parents and also dedicating this work to our honorable instructor
of Fini619 who help me a lot to do my work accurately and guide me in my every
difficulty.
5. Acknowledgement
1st of all I thanks to my Almighty ALLAH who gave me power and confidence to done
my internship and HOLY PROPHET HAZARAT MUHAMMAD (Peace be upon him)
who is a light for humanity.
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In starting am little bit confuse because its my 1st experience to work in practical life but
my 1st experience is vary good I many good peoples help me to do my work effectively
specially my instructor of FINI 619 help me a lot when I confuse in some parts of
internship I mail to instructor respected Sir were always ready to guide me during the
report work, which gave me a lot of back-up. I also thanks to my bank employees of the
NBP who remained supportive and cooperative throughout the report to complete it and
specially branch Manager Miss Asia Aslam.
My some senior friends also guide me to make my internship report I would like to say
thanks to all that peoples. Allah blesses them all and gives success all in every field of
life.
6. Executive summary
I am doing my internship in famous and reputed bank of Pakistan the name of that bank
is National Bank of Pakistan the report is based on my six weeks internship program in
National Bank of Pakistan. According to my observation during internship the NBP
maintains an excellent position in banking sectors in Pakistan and this is based on the
over all performance of National Bank of Pakistan. This report contains the detail of NBP
and the departments where I worked during internship and these departments includes
Account Opening Department, Bill Collection Department, Cash Department, Credit
Department and Remittance Department.
It also includes the Ratio Analysis and these ratios include all ratios that my university
required with complete formula, working, table, graph and interpretation.
I also mention my work experience during internship in different sectors. I also discuss in
my report the executive summary of NBP and Recommendations for Improvement and
the sources that I used to make this report. I have learned and informed about different
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aspects specially about banking sector, it’s my 1st working experience so it will help me
while I will be professional.
NBP has 1254 nationwide and almost 25 branches operating in other foreign countries
including USA, China, France, Hong Kong, Azerbaijan, Bangladesh, and Hong Kong.
The objective of this Internship was to explore the issues relating to Finance and to find
out problems regarding the theoretical concepts with practical experience working in an
organization during the internship and study the system of National Bank of Pakistan.
According to my knowledge there is much possible perfections, which we can make
positive changes in the system of NBP in coming years.
In this my NBP report I also talk about the way of investment, rates of investment, all
types of financing and loans services the National Bank of Pakistan provides. The
problems of branch where I am doing internship F-10 markaz branch are also discussed.
7. Table of content
Lesson No. Title / Topic Page No.1. Title page 1a. Name of the organization 1b. Name of the Internee, Student ID and session 1c. Submission date of the internship report 1d. Name of the University 1e. VU logo 12. Letter of Undertaking 23. Scanned copy of the internship 34. Dedication 45. Acknowledgement 56 Executive summary 67. Table of contents8. Brief introduction of the organization’s business
sector9-10
9. Overview of the organization 11-21a. Brief history 11-13b. Organizational Hierarchy chart 14-15c. Business volume (Total number of stock, shares, bonds/
commodities, future contracts planned for a particular 16
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period etc).d. Product lines (List complete range of products/ services of
the organization)17
e. Competitors 18f. Brief Introduction of all the departments 19-20g. Comments on the organizational structure 21
10. Plan of your internship program 22a. A brief introduction of the branch where you did your
internship17
b. Starting and ending dates of your internship 17c. Names of the departments in which you got training and
the duration of yourtraining
17
11. Training program 231st Account Opening Department 232nd Bill Collection Department 253rd Cash Department 264th Credit Department 275th Remittance Department 2812. Ratio Analysis 29a) Liquidity Ratios
Liquidity ratios measure a firm’s ability to meet its current obligations.
29
• Current Ratio 29• Acid Test Ratio 31• Working capital 33b) Leverage Ratios
Leverage ratios measure the degree of protection of suppliers of long term funds.
35
• Times Interest Earned 35• Debt Ratio 37• Debt / Equity Ratio 38
Debt to Tangible Net worth Ratio 40• Total Capitalization Ratio 41c) Profitability Ratios
Profitability ratios measure the earning ability of a firm.
43
• Net Profit Margin 43• Return on Assets 45• DuPont Return on Assets 47• Operating Income Margin 49
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• Return on Operating Assets 50• Return on Total Equity 52• Gross Profit Margin 54d) Activity Ratios
Activity ratios measure a firm's ability to convert different accounts within their balance sheets into cash or sales.
55
• Total Assets Turnover 56• Fixed Assets Turnover 57e) Market Ratios
Market ratios are commonly used by the investors to assess the performance of a business as an investment and also the cost of issuing stock.
59
• Dividend per share 59• Earning per Share 61• Price/Earning Ratio 63
13. Future Prospects of the Organization 6514. Conclusion 66-6715. Recommendations for Improvement 68-7016. Reference & Sources used 7117. Annexes 71
8. Brief introduction of the organization’s business sector
Am doing my internship in NBP f-10 branch markaz Islamabad now I will discuss the
brief introduction of national Bank of Pakistan in business sector
The national bank of Pakistan was established in 9th November 1949 under the ordinance
XIX. The NBP commenced its operations from 20th November 1949. The Bank was
incorporated under the National Bank of Pakistan Ordinance 1949 and is listed there
Pakistani stock exchanges. The bank controls treasury dealings for the Government of
Pakistan as a representative to the State Bank of Pakistan. NBP offers a commercial
banking and interrelated services in Pakistan as well as out side of Pakistan. The business
sector of NBP is banking sector and the banks plays a vital role in an economy of country
NBP also played an important role NBP also provide banking or financial services in
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Pakistan bank plays a major part in economy now a days the current economics crisis in
united stares and Europe as well as Pakistan as we see day by day down sizing and is
because the ongoing weakness of major bank and the result of all this is credit and
capital crush so we can say its prove from history that the banking sector is plays a vary
important role in national and global economy.
National bank of Pakistan provides to its customers the following benefits saving
accounts, home financing, personal loans, ATM and debit cards, financing facility for
stock investors, Internet based home remittance service, cash against gold, and personal
accident insurance these benefits is vary useful for customers.
In between 2002 to 2007 the accelerated economy growth of Pakistan was underpinned
by a strong banking sector the banking industry assets is above $60 its profit remain high
and its NPLS are low. Pakistan is Islamic country and the national bank of Pakistan offers
is Islamic banking services these services include deposit schemes, like current deposit
scheme and profit and loss sharing deposit scheme and also financing facilities and also
provided letters of credit facility, issuance of bank drafts and pay orders, handling of
remittances, government collections, collection of export bills and local bills, and utility
bills collection services. It also provided international banking trade that provide services
comprise letters of credit, trade financing, international payments and collection services,
structured trade finance, document presentation and payment services, pre– and post–
shipment financing, bank–to–bank reimbursements, documentary credits, import finance,
shipping guarantees, and cash management solutions. NBP is government bank so
peoples trust to NBP is high as compare other banks and NBP provides trustee services to
national investment trust, long-term credit fund, and endowment fund for student loans
scheme.
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9. Overview of the organizationa. Brief historyHistory: NBP was established under the National Bank of Pakistan Ordinance in
November 8 1949 in Pakistan and wa s 100% gove rnmen t owned . The need for
the establishment came due to the reason of newly country with economics crisis. In July
1948 to carry on the responsibilities of issuing the currency and most importantly
controlling the flow of money in side the country.
Role: The Special Role of National Bank of Pakistan is occupies a unique position in the
financial sector of Pakistan. It also acts as an agent of the Central Bank wherever the
State Bank does not have its own Branch. It also undertakes Government Treasury
operations.
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Ownership: NBP is 100% owned by the Government of Pakistan.
Branch Network: NBP has an extensive domestic branch network of over 1500 branches
located all over Pakistan. The Bank also has a presence in 24 international locations
including the USA, United Kingdom, Europe and the Far East.
Deposits of National bank of Pakistan: NBP holds 24.6% share of time and demand
deposits in the country. Local currency deposits comprise 67% of bank's total deposits
while foreign currency deposits account for the rest.
Head office and Branches: Head office of national bank is in Karachi with their 1431
branches local and 24 branches internationally.
Provincial Headquarters: Sindh 06, Baluchistan 02, Punjab 14, NWFP 05, Azad
Kashmir 02, total 29.
Awarded: National bank of Pakistan was given awarded of best bank of the year in 2001,
2002, and 2004 by the banker a publication of financial times London. In 2005 the
national bank of Pakistan is also given best bank of the year by the bankers by global
finance magazine. National Bank has earned recognition and numerous awards
internationally. It has been the recipient of The Bank of the Year 2001, 2002, 2004 and
2005 Award by The Banker Magazine, the Best Foreign Exchange Bank –– Pakistan for
2004, 2005, 2006 and 2007, Global Finance, Best Emerging Market Bank from Pakistan
for the year 2005, Global Finance, Kisan Time Awards – 2005 for NBP's services in the
agriculture field. It is listed amongst the Region's largest banks and also amongst the
largest banks in South Asia 2005, The Asian Banker. It has also been presented a
Recognition Award –– 2004 for having a Gender Sensitive Management by WEBCOP
AASHA besides other awards.
Precise Summary of National Bank of Pakistan year by year
The precise summary of National Bank of Pakistan regarding its countrywide and
overseas operations is as fallows:
In the year 1949 National Bank of Pakistan was established under the National Bank
of Pakistan Ordinance 1949 and was 100% govt.-owned.
In the year 1950 NBP established a branch in Jeddah, Saudi Arabia.
The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4,
In the year 1947 by the former Bahawalpur State
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In the year 1955 By this time NBP had branches in London and Calcutta.
In the year 1957 NBP established a branch in Baghdad, Iraq.
In the year 1962 NBP established a branch in Dar-es-Salaam, Tanganyika.
In the year 1964 The Iraqi government nationalized NBP's Baghdad branch.
In the year 1965 The Indian government seized the Calcutta branch on the outbreak of
hostilities between India and Pakistan.
In the year 1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.
In the year 1971 NBP acquired Bank of China's two branches, one in Karachi and one
at Chittagong. At separation of East Pakistan NBP lost its branches there. NBP
merged with Eastern Mercantile Bank and with Eastern Bank Corporation.
In the year 1974 the government of Pakistan nationalized NBP. As part of the
concomitant consolidation of the banking sector, NBP acquired Bank of Bahawalpur
(est. 1947).
In the year 1977 NBP opened an offshore brain Cairo.
In the year 1994 NBP amalgamated Mehran Bank (est. 1991).
In the year 1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.
In the year 2000 NBP opened a representative office in Almaty, Kazakhstan.
In the year 2001 State Bank of Pakistan and Bank of England agree to allow only 2
Pakistani banks to operate in the UK. NBP and United Bank agreed to merge their
operations to form Pakistan International Bank, of which NBP would own 45% and
United Bank 55%.
In the year 2003 NBP received permission to open a branch in Afghanistan.
In the year 2005 NBP closed its offshore branch in Cairo which opened in 1977.
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b. Organizational Hierarchy chart
Syed Ali Raza Chairman NBP Board of Directors
Qamar Hussain President NBP
MR. Tariq Kirmni Director
Mrs. Haniya Shahid Naseem Director
Ms Nazrat Bsahir Director
Mr. Ekhlaq Ahmed Secretary Board of Directors
Organizational Hierarchy Chart at NBP Head Office Karachi
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Organization Chart of NBP
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c. Business volume
In Millions
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Description 2006 2007 2008 2009 2010
Profit
before tax
26,311 28,061 23,001 21,300 2,4,415
Profit after
tax
17,022 19,034 15,459 17,562 17,563
Shareholder
’s equity
353,045 69,271 81,367 94,142 103,762
Advances –
net
316,110 340,319 412,987 475,243 477,507
Total Assets 635,133 762,194 817,758 944,583 1,035,025
Deposits 501,672 591,907 624,939 727,465 832,152
Investments 139,947 211,146 170,822 217,643 301,324
Earnings
per share
12.65 14.15 11.49 13.05 13.05
d. Product linesThe product lines is given below
PREMIUM AMDANI PREMIUM SAVER SAIBAAN ADVANCE SALARY CASH CARD INVESTOR ADVANTAGE CASH AND GOLD KISAN TAQAT KISAN DOST
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PAK REMIT PROTECTION SHIELD
Services
Islamic Banking Student Loan Scheme Demand Drafts(DD) Equity Investment Commercial Finance Trade Finance International Finance Home Finance Foreign Currency Account Short Term Investment NIDA( National Income Daily Account) Foreign remittance Travelers Cheques Swift System Letter of Credit Pay Order (PO) Mail Transfer (MT)
e. Competitors
Now a day in this world of competition the NBP is facing much competition. The
competitors list of NBP is very large as there are many private and commercial banks
operating in the country. Competitors of the NBP which are given below
MCB Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited Saudi Pak Bank Limited Atlas Bank Limited
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SILKBANK Limited United Bank Limited Allied Bank Limited Askari Commercial Bank Limited Bank Al-Habib Limited Bank Al-Falah Limited. Standard Chartered Bank Limited First Women Bank The Bank of Khyber Bank of Punjab Faysal Bank Limited Atlas Bank Limited Bank Alfalah Limited Soneri Bank Limited Askari Bank Limited
f. Brief Introduction of all the departmentsThere are many departments of National Bank of Pakistan I will write the following main
departments of National Bank of Pakistan F-10 Markaz branch and where I got training
as internee are given below:
1st Account Opening Department
2nd Bill Collection Department
3rd Cash Department
4th Credit Department
5th Remittance Department
I already describe in detail of these entire department in my internship report One by one
I will summarize or over view all these again.
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1 st Account Opening Department: In my 1st 2 weeks of internship I work as an internee in account opening department in
NBP. It’s a major department of NBP the basic purpose of Account Opening Department the relationship between banker-customer. Account opening department performs the
duty of opening accounts and issues checkbooks to clients. A person who requests to
open an account with the bank has to fill an account opening form obtained from any
branch of National Bank of Pakistan.
Types of accounts that are opened
I learned in my training in account opening department the following account is opened.
1. PLS Account or PLS Saving Account
2. Current Account
3. Fixed Deposit Account
2 nd Bill Collection Department: I also work in the bill collection department in NBP during my internship. The basic
purpose of bill collection department is collected utility bills from customers that he pays
at end of every month
These bills include
Water bills
Gas bills
Electricity bills
Telephone bills
3 rd Cash Department: I also work in cash departments during internship in NBP. Cash depart in vary sensitive
department o every bank as well as National Bank of Pakistan No body is allowed freely
like other department this department all depend on cash a security guard is also standing
for safe from theft and also sensitive department some times customer pays frauds are
made in this department so extra care needed in this department.
4 th Credit Department: In my internship program in NBP I also work in credit department. The basic purpose of
this department id to collect spare, extra or surplus money or currency from peoples or
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customers at vary low rate and gives or provided lend this money at high rates to get
more and more profit. Now a days NBP gives a vary low amount to customer because in
Pakistan there is instability and day by day the investor go out from Pakistan because of
in security financial crises is also big cause of it so the loan ratio is vary low down day by
day with the passage of time.
5 th Remittance Department: Finally in my last week of internship as an internee in NBP I work in Remittance
Department. The remittance department transfers the money from domestic to
international level. According to my learning there are two categories of remittance
department 1st one is domestic or local remittance department and the 2nd one is foreign
remittance department. In local remittance the transfer money with in national or
domestic boundaries and in foreign transfer money out side from national or international
boundaries In my internship program the manager told me the main functions of
Remittance Department these main or important functions takes places in the following
ways I observed these are Closing and scrolling of government collections, issuing of
payment order, issuing of demand draft, issuing of call deposit, issuing of Mail transfer
and issuing of call deposit.
In NBP remittance takes places in the following ways. These ways are given below.
1st Telegraphic / Mail Transfers and its easy and fastest way
2nd one is Demand Draft / Pay Orders
g. Comments on the organizational structure
I understand during my internship program the Organizational Structure NBP is
centralized but need some changes with the passage of time because in this world day by
day technology changes and its necessary to change the Organizational Structure time by
time and I also observed the NBP is the oldest bank of in Pakistan and in last 62 years a
lot of changes in NBP Organizational Structure but I observed the Organizational
Structure is not professionally developed and implemented. In NBP F-10 Markaz Branch
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where I work as internee in that department all employees in different department work
properly and here Organizational Structure but also need some changes.
10. Plan of My internship programIntroduction of branch
Name of branch: National Bank of Pakistan F-10 Markaz Branch
City: Islamabad
Branch Code: 1933
Branch manager: Miss Asia Aslam
Operating manager: Mr. Ali
Phone Number: +92-051-9218734
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I did my internship or training from National bank of Pakistan F-10/4 Markaz Islamabad
and branch code is 1933.Under the branch manager Miss Asia Aslam. In this branch of
national bank the branch manager is Miss Asia Aslam and Mr. Ali is operating manager
both are superior working and very fair with their job. When I start my internship I face
many difficulties because its my 1st experience to do training or internship in any where
so I don’t have experience practical work before but here cooperative management
specially miss Asia Aslam Branch manager help me for my this 1st to complete my tasks
efficiently and I observed the other management members or staff is also vary
cooperative who also help me in a friendly manners. In start am little bit confuse but after
the observed the cooperation of staff I enjoy my internship I also appreciate and thanks
all management who help me to complete my tasks in good manners.
Duration of My training or Internship Program
The starting date of my Internship Program is May 9, 2011
The ending date of my Internship Program is June 22, 2011
Name of the Department in which I worked in my internship.
Name of the Department Duration
Account Opening Department 2 Weeks
Bill Collection Department 1 Week
Cash Department 1 Week
Remittance Department. 1 Week
11. Training programMy training or internship program from National Bank of Pakistan F-10 Markaz Branch
Islamabad I also mention the departments where I work as internee that is given below.
1st Account Opening Department
2nd Bill Collection Department
3rd Cash Department
4th Credit Department
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5th Remittance Department
One By one I will describe in detail of all my training program departments
1 st Account Opening Department The account opening department is a first department where I learned and spent my
internship maximum periods 2 weeks as compares to other departments. In my vary 1 st
day I am little bit confused to start and learned about department because its my 1st
experience practically but the cooperative staff and branch manager help me to
understand all procedure now I observed how the employee work in this department and
what is the requirements to open the account and what is the rules and procedure to
follow the customer. In this department requires some basic requirements for open an
account of customer the customer must have the reference of any residence of Pakistan
who has already account holder of National Bank of Pakistan and when customer gives
reference of some ones who has account in NBP the bank confirms it with NADRA.
After 3 or 4 days I learned many things about opening account and rules and procedures
and also the requirements like what is the title of account, address of the customer, recent
ID card number, National tax number, PTCL and Mobile number amount deposit,
signature, Law must qualify the customer, Age of majority and must be of sound mind
Than I learned and opened a account of customer under supervision of staff and these
procedure must be followed the customer come to bank and meet the manager about
account opening procedure than manager guide him or her about the account he or she
wants to open in the bank than manager guide me and I follow the rules now give to
customer account opening form along with document like signature card and Pay-in-slip.
Than the customer fill the account opening from if he has any difficulty than management
or account opening officer guide him or her and when customer fill are form this form
sent to manager for approval than the concerned officer gives new account number and
guide to deposit initial deposit in cash counter. And check book gives to customer
according to customer need or requirement because some check books has 25, 50 and
more it’s depend on customer requirement. When I opened some accounts than I know
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the procedure and after this it’s vary easy for me because I know now all procedures to
open a accounts and I opened some accounts
Types of accounts that are opened
I learned in my training in account opening department the following account is opened.
1. PLS Account or PLS Saving Account
2. Current Account
3. Fixed Deposit Account
The details of these accounts are given below one by one.
1. PLS Account or PLS Saving Account 1st I would like to discuss the PLS account or PLS saving account that I learned from
manager it is interest free account mostly the lower or middle income level or small
business man, Allam or Moulana or people who don’t like interest like usually make such
deposit in this account the transaction. In this account the transaction is not every day or
daily. Funds can normally deposited through pay order, cash, check etc.
2. Current Account 2nd I like to discuss the current account that I learned from manager this account or
current account it’s depend on daily bases normally through cheque, ATM, Pay order etc
drawn on the bank and these deposit stand the current liability of the bank. The bank keep
fund of his hand and customer normally use this account mostly now a days through
ATM because its vary easy and advanced method. And there is no limit for deposit.
3. Fixed Deposit Account 3rd I would like to discuss the fixed deposit account I learned from manager that this
account normally opened and high faculty or extra ordinary people or business man for a
long period of time and this type of account is less use as compare to other account. In
this account the customer invest in different sector for a long period of time where his or
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her money is saved from theft and also with higher return. The other account I opened
because these are daily use accounts and normal or middle class peoples use but this fixes
account I don’t opened because in my in my period of internship there in only 1 or 2
peoples who opened this account I learned but not accurate so I got more information
from the manager of the bank.
2 nd Bill Collection Department In my internship program I also worked in Bill Collection department in one week.
In 1st day in bill collection department 1 get information from manager about the
function, rules and procedure involve in bill collection department after get information
from manager I see or observed bill collection department collects different utility bills
which peoples pay every months.
These bills include
Water bills
Gas bills
Electricity bills
Telephone billsI collect some bills according to instruction that manager gives me about bill collection
department and in bill collection department my duty is when collect bill is must see the
due date and what’s the amount collect in due date and these are written in every bill and
after date because after date extra amount paid or late payment charges paid by the
customer if bill not paid within due date. Also mention in bill manually if customer gives
big note like note of RS 5000 and bill id 1050 than in bill written manually 5000-1050 =
3950 it means customer give 5000 note and bill amount is 1050 we deduct from 5000 and
we gives 3950 the remaining amount to customer. The amount received like in due date
amount received circle the received amount within due date and if payment id after due
date circle after date and in after date late payment charges included and circle and
collect money and than bank stamp and also sigh on it is its guarantee that this means f-
10 markaz Islamabad branch received this bill. The bank also charges commission in
each bill that is revenue of the bank and also for government of Pakistan. At the end of
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the day all amount counts count that received from from received against bill collection
from customers and gives by the relevant bill collection department and bill collection
department sends mail to the head office.
3 rd Cash Department In duration of my internship in NBP as internee I work in cash department fro 1 week. In
cash department 1st I try to understand working procedure in this department I also
observed that cash department is the most important section in the bank. Cash department
perform the function of bank payment and receipt, government receipt and payment and
collection of utility bills
The cash department is vary important and sensitive because in this department no body
is allowed freely like other department this department all depend on cash a security
guard is also standing for safe from theft and also sensitive department some times
customer pays frauds are made in this department so extra care needed in this
department.
And if closing the balance is not match than the cashier must match it before
leave this department some times hours takes to match cash in this
department if cash not match than cashier pay with its own pay or with own
recourses
So cash department is vary sensitive department mostly people come for the
purpose of cash in this department with drawn and deposit if any account holder comes to
draw the amount it must b checked the total amount on cheque, date, signature of the
account holder, and then he gets payment form the cash counter from the cashier and
some account holder comes for the purpose of deposit the money in cash department.
4 th Credit Department As an internee I work and observed in credit department for the duration of 1 week in
National Bank of Pakistan F-10 Markaz Branch Islamabad.
The basic purpose of this department id to collect spare, extra or surplus money or
currency from peoples or customers at vary low rate and gives or provided lend this
money at high rates to get more and more profit.
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According to my observation and work as internee in NBP during my internship I
observe that the basic purpose of credit department is provide load to load seekers.
These peoples get loan from bank and fulfill our requirements and bank charges interest
against. I also observe now a days of technology every bank adopt this method to get
profit. I observed when national bank of Pakistan F-10 branch Islamabad when NBP
provide or gives to some one some basic information collect by the bank to reduce fraud
because now a days some fraud peoples gets illegally loan from bank and cant return to
bank some fraud peoples write wrong address and some are going out side of country and
that’s a big loss of bank so bank now a days bank confirm it with the customers near
police station about the reputation of customer and NBP required some basic information
and criteria before gives loan to peoples some basic information that banks gets like
customer name, National Identity Card, The required documents checked is it in original
from or not.
Now a days NBP gives a vary low amount to customer because in Pakistan there is
instability and day by day the investor go out from Pakistan because of in security
financial crises is also big cause of it so the loan ratio is vary low down day by day with
the passage of time.
5 th Remittance Department In my internship program and also last week of my internship I also worked in
Remittance department in one week .I observed or learned that main purpose of
Remittance department is to move money from one place to another place. The
remittance department transfers the money from domestic to international level.
According to my learning there are two categories of remittance department 1st one is
domestic or local remittance department and the 2nd one is foreign remittance department.
In local remittance the transfer money with in national or domestic boundaries and in
foreign transfer money out side from national or international boundaries In my
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internship program the manager told me the main functions of Remittance Department
these main or important functions takes places in the following ways I observed these are
Closing and scrolling of government collections, issuing of payment order, issuing of
demand draft, issuing of call deposit, issuing of Mail transfer and issuing of call deposit.
When I work in this department I also observed the important particulars of demand draft
filled, Name of the branch on which draft is drawn, Address of the applicant, signature of
the applicant, exchange rates of the bank, Total amount in figure and also in words, name
of the person who receive the money. Under the supervision manager I fill some demand
draft that gives me some useful information about this department and I also want to get
more and more information about this department and manager help me a lot.
In NBP remittance takes places in the following ways. These ways are given below.
1st Telegraphic / Mail Transfers and its easy and fastest way and 2nd one is Demand
Draft / Pay Orders
Bank is responsible for remittance from one bank to another bank in case
This is my last week on internship in national bank of Pakistan and word in remittance
department I work hard also cooperative staff and manager really help me for this am
thankful to all management and staff of National Bank of Pakistan F-10 branch and also
thankful fro bank branch manager Miss Asia Aslam she help me lot in my all Internship
12. Ratio Analysis
a) Liquidity Ratios
Liquidity ratios measure a firm’s ability to meet its current obligations.
These include:
• Current Ratio
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• Acid Test Ratio
• Working capital
Name of the ratio Current ratio
FORMULLA OF CURRENT RATIO
The formula of current ratio is given below
With the help of formula we calculate or find current ratio
Current Ratio = Current Assets / Current Liabilities
It means we add all current assets after add all current assets we add all current
liabilities and than divide current ratio with current liabilities
As we shown in given below
Show in table
YEARS 2008 2009 2010Current assets 584,977,140 645,064,165 693,463,980
Current liabilities 682,905,461 725,293,720 867,626,367
Current Ratio 0.86 : 1 0.89 : 1 0.80 : 1
Working:
Which short term advances and investments?
Only fixed deposits will not be considered here
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Held for trading and available for sale will be considered as current
Current asset = Cash and balances with treasury banks + Balances
with other banks + Lending to financial institution-net + short term
Investment + Short term Advances + Other asset (Only Short Term)
After adding all current assets according to given format the
current assets of 2008 = 584,977,140 and 2009 = 645,064,165 and 2010
= 693,463,980
Current liability = Bills payable + Short Term Borrowing + Short
Term Deposit and other account + short term liabilities against
assets subjects to finance lease + other liability(Only short term)
After adding all current Liabilities according to given format the
Current Liabilities of 2008 = 682,905,461 and 2009 = 725,293,720 and
2010 = 867,626,367
Finally divide current assets with current liabilities answer is current ratio
Graphical Presentation of Current ratio
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Interpretation
The current ratio shows in 2008 the current ratio of national bank of Pakistan
is 0.85 it means the current assets increases not much as compare to current
liabilities and in 2009 shows the incrasing trends as compare to 2008 the
current ratio of 2009 is 0.88 but again in 2010 it shows 0.79 that is much
less as compared to 2008 and 2009 .
Name of the ratio• Acid Test Ratio
With the help of formula we calculate or find Acid Test Ratio
Formula is given below
Acid Test Ratio = More liquid Assets/current liabilities
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It means more liquid Assets / Current liabilities
Show in table
YEARS 2008 2009 2010More liquid Assets 582,255,871 630,040,628 691,160,473
Current Liabilities 682,905,461 725,293,720 867,626,367
Acid test Ratio 0.85 :1 0.87 :1 0.80 :1
Working:
More liquid Assets = Cash and balances with treasury banks + Balances with
other banks + Lending to financial institution-net + short term
Investment+short term Advances + Other asset(short term) -advance(deposits,
rent and other prepayments).
Current liability = Bills payable + Short term Borrowing + Short term
Deposit and other account+short term liabilitiesagainst assets subjects to
finance lease + other liability(short term)
Graphical Presentation of Acid Test Ratio
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Interpretation:As we see the more liquid Assets are less than current liabilities in all three years 2008,
2009 and 2010 but in year. As we see in graph the Acid Test Ratio of 2009 is higher
as compare to 2008 and 2010 and we calculate Acid Test Ratio find all by subtract all
prepaid expenses from current assets to find it.
Name of the ratio• Working capitalTo find out working capital ratio we use the following formula that is given below
With the help of formula we calculate or find Working Capital
Formula: Working Capital ratio = Current Assets - Current Liability
Show in table
Make correctiosn as instructed aboveYEARS 2008 2009 2010
Current assets 584,977,140 645,064,165 693,463,983
Current liabilities 682,905,461 725,293,720 867,626,367
Working capital -97,928,321 -80,229,555 -174,162,384
Working
Current Asset = Cash and balances with treasury banks + Balances
with other banks + Lending to financial institution-net + Short
term Investment + short term Advances + Other asset(short term)
Current liability = Bills payable+ Short term Borrowing + Short
term Deposit and other account + Short term liabilities against
assets subjects to finance lease + other liability(Short term)
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Graphical Presentation of Working capital
Working:
Current asset = Cash and balances with treasury banks + Balances with other
banks + Lending to financial institution-net + short term Investment + Short
term Advances + Other asset(Short term)
Current liability = Bills payable + Short term Borrowing + Short term Deposit
and other account + Short term liabilities against Assets subjects to finance
lease + Other liability(Short term)
Interpretation:We see in all three years 2008, 2009 and 2010 this can show the negative
trend which is the bad sign for the company. It due to the increasing of
current liabilities or the excess of liabilities over current assets. In 2010
negative sigh in to much high as compare to 2008 and 2009 so its vary bad
for company.
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b) Leverage RatiosLeverage ratios measure the degree of protection of suppliers of long
term funds.
These include:
• Times Interest Earned
• Debt Ratio
• Debt / Equity Ratio
• Debt to Tangible Net worth Ratio
• Total Capitalization Ratio
Name of the ratio• Times Interest Earned
To find out Times Interest Earned we use the following formula that is given below
With the help of formula we calculate or find Times Interest Earned
Formula: Times Interest Earned: EBIT / Interest Expenses
EBIT = Profit before taxation + Markup Interest Expenses / Interest Expenses
Show in tableYears 2008 2009 2010
EBIT 46,885,766 61,789,822 69,665,595
Interest expenses 23,884,768 40,489,649 45,250,476
Total interest 1.96 Times 1.52 Times 1.53 Times
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earned
EBIT/Interest
expenses
Working:
Profit before Taxation: Mark up income –Markup expencess= Gross profit
Gross profit - (Provision for advances + Provision for the value of
Investment + Provision against off balance sheet obligations + Bad debts
written off) = Net mark-up interest income
Net mark-up interest income+ Fee commission & brokerage income+
Dividend income +Exchange income+ + gain on sale of securities+ Other
income = Total non mark up interest income
Total non markup interest income- Administrative expense-Other provisions-
Other charges = Profit before tax
Interest expenses: Interest expenses given in profit and loss account on 2 nd
head as mark up return interest expense.
Graphical Presentation of Times Interest Earned
Interpretation:
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As we see in table the Time interest ratio is decreasing over the time. In 2008
the time interest ratio is 1.96 but in 2008 its decrease it with 1.52 Time
interest can also show the decreasing trend in coming year and than increasing trend in
next year like In 2009 it little increase 1.53 as compare to 2009.
Name of the ratio• Debt Ratio
Formula: Debt Ratio = Total liabilities / Total Assets
Its simple calculate total liabilities of all year than calculate total assets
of all year and than total liabilities divide by total assets than we find
debt ratio
Show in tableYear 2008 2009 2010
Total liabilities 715,299,108 825,676,384 906,528,852
Total Assets 817,758,326 944,582,762 1035,024,680
Debt Ratio 0.875 Times 0.874 Times 0.876 Times
WorkingTotal Debts = Bills payable + Borrowing + Deposit and other accounts + Sub-
ordinated loans +Liabilities against assets subject to finance lease + Deferd
tax liability + Other liability
Total Assets: Cash and balances with treasury banks + Balances with other
banks + Lending to Financial Institution + Investment + Advances +
Operating fixed asset + Defferd tax asset + other assets
Graphical Presentation of Debt Ratio
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Interpretation:As we see in table the debt ratio is not much increase or decrease it all same
in all three years. Here company have more assets then debt because debt ratio of
greater than 1 indicates that a company has more debt than assets; while, a debt ratio of
less than 1 indicates that a company has more assets than debt.
Name of the ratio• Debt / Equity RatioFormula: Debt to Equity Ratio = Total liabilities (Debt) / Shareholder equity
Show in tableYear 2008 2009 2010
Total Liabilities 715,299,108 25,676,384 906,528,852
Shareholder Equity 81,497,458 94,265,853 103,880,048
Debt to Equity
Ratio
8.78 times 8.76 times 8.73 times
Working:
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Total debts = Bill payable + Borrowings + deposits and other Account + Sub-ordinate
Loans Liabilities against Assets subjects to finance lease+ Deferred tax Liabilities +
Other liabilities
Share holder equity = Share Capital + Reserves + unappropriate profit + Surplus on
revaluation of fixed assets.
Graphical Presentation of Debt / Equity Ratio
Interpretation:As we see in table the ratio of 2008 shows 6.98 which is decreased in 2009 by 6.94 but in
2010 its again increase by 7.05. Its show that the company is finances its assets and
heavily relies on debt finances.
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Name of ratio:
• Debt to Tangible Net worth Ratio:Formula: Total liability/(Net worth- Net intangible asset)
Show in tableYear 2008 2009 2010
Total Liabilities 715,299,108 825,676,384 906,528,852
Tangible net worth 102,453,293 118,888,848 128,487,598
Debt to Tangible
Worth Ratio
6.98 Times 6.94 Times 7.05 Times
Working:Total Debts = Bill payable + Borrowings + Deposits and other Account + Sub-ordinate
Loans Liabilities against Assets subjects to finance lease + Deferred tax Liabilities +
Other liabilities
Net Worth = Total Asset - Total liability
Intangible asset = (Mention in notes of balance sheet 11.3)
Intangible asset of 2008 is 5,925, Intangible asset of 2009 = 17,530 and Intangible asset
of 2010 = 8,230
Graphical Presentation of Debt to Tangible Net worth Ratio:
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Interpretation:The overall show the increasing trend of the company in 2008 it shows the 6.98 and there
2009 it decrease by 6.94 and again in 2010 it increase up to 7.05.
So in year 2010 it’s greater as compare to 2008 and 2009 and it’s less in 2009 as compare
to 2008 and 2010.
Name of ratio
Total Capitalization Ratio:
Formula: Long term debt / Long term debt + Share holder equity
Show in table
Year 2008 2009 2010
Long term debt 32,393,647 100,382,664 38,902,486
Share holder equity
+ long term debt
113,760,649 194,524,583 142,664,796
Capitalization
Ratio
0.28 Times 0.51 Times 0.27 Times
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Working:
Long term Debts = Long term borrowing + long term deposits and other
accounts + Sub-ordinated loans + Liabilities against assets subject to finance
lease +Deferd tax liability + Other liabilities(long term)
Share holder equity+ long term debts = Share capital + Resevers +
+unappropriated profit + surplus on revaluation of asset + Long term
borrowing + long term deposits and other accounts + Sub-ordinated loans +
Liabilities against assets subject to finance lease + Defferd tax liability +
other liabilities(long term)
Graphical Presentation of Total Capitalization Ratio
Interpretation :Total Capitalization Ratio is high in 2009 as compare to 2008 and 2010 the overall trend
of debt contribution towards financing shows the increasing trend of the company. In
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2008 it shows the 2.5 and there is further increase 2009 & 2010 so the overall trend of
debt contribution towards financing is high.
c) Profitability Ratios
Profitability ratios measure the earning ability of a firm.
These include:
• Net Profit Margin
• Return on Assets
• DuPont Return on Assets
• Operating Income Margin
• Return on Operating Assets
• Return on Total Equity
• Gross Profit Margin
Name of ratio
• Net Profit Margin
Formula: Net Profit Margin = Net Profit /Net Sales*100Show in table
Year 2008 2009 2010
Net Profit ‘a’ 15,458,590 17,561,846 17,563,214
Net Sales ‘b’ 60,942,798 77,947,697 88,472,134
Net Profit Margin
ratio: a/b
25.4% 22.5% 19.9%
Working:
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Net profit is the profit after tax which is obtained as: Mark up revenue –
markup expenses = Gross profit
Gross profit - (Provision for advances + Provision for investment +
Provision lending to financial institution + Bad debts written off) = Net
mark-up income
Net mark-up income + Fee & commission + Dividend income + Exchange
income + other income + Gain on sale of securities = Total income
Total income - Administrative expense - Other provisions - Other charges +
Share of income = Profit before tax
Profit before tax- tax = Profit after tax
And net sale = Mark up revenue
Graphical Presentation of Net Profit Margin
Interpretation:
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The table shows that Net Profit margin is showing decreasing trend in 2009,
which again decreases in 2010 as compare to 2008 so NBP has not
significant improved net profit margin in the this years in coming years after
2008.
Name of ratio
• Return on AssetsFormula: Return on asset: (EBIT / Total Assets)*100
Show in tableYear 2008 2009 2010
EBIT a’ 46,885,766 61,789,822 69,665,595
Total Assets ‘b’ 817,758,326 944,582,762 1,035,024,680
Return on Asset
Ratio ‘a/b’
5.73% 6.54% 6.73%
Working:Revenue – Markup Expenses = Gross Profit
Gross profit - (Provision for advances + Provision for investment + Provision lending to
financial institution + Bad debts written off) = Net mark- up income
Net mark-up income + Fee & commission + Dividend income + Exchange income +
other income + gain on sale of securities = Total income
Total income - Administrative expense - Other provisions - Other charges + Share of
income = Profit before tax
EBIT = Profit before Taxation + Interest expenses
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Total Assets: Cash and balances with treasury banks + Balances with other banks +
lending to financial institution + Investment+ Advances + Other asset + Operating fixed
Asset + Defferd tax asset-net.
Graphical Presentation of Return on Assets
Interpretation:
The table shows that the return on assets of 2008 is greater as compare to 2009 and 2010
so the ratio analysis explains that Return on Assets is growing in the year 2008, which is
2.81%. But after this it increases from previous level and then it reached at 2.26% in
financial year 2009, again it decrease to 2.36% in year 2010.
Name of ratio
• DuPont Return on AssetsFormula: DuPont Return on Assets = Net Income/Net sales * Net Sales/ total Asset
Show in tableYear 2008 2009 2010
Net 15,458,590/60,942,798 17,561,846/77,947,697 17,563,214/88,472,134
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Income/
Net
Sales
‘x’
=0.254 =0.225 =0.199
Net
Sales/
Total
Asset
‘y’
60,942,798/817,758,326=
0.075
77,947,697/944,582,762
=0.083
88,472,134/1,035,024,680
=0.085
DuPont
Return
On
Assets
‘x*y
1.91% 1.87% 1.69%
Working:Net Income/Net Sale:Net Income:
Net profit or net income is the profit after tax which is obtained as mark up revenue –
markup expenses = Gross profit
Gross profit- (Provision for advances + Provision for investment + Provision lending to
financial institution + Bad debts written off) = Net mark-up income
Net mark-up income + Fee & commission + Dividend income + Exchange income +
other income + gain on sale of securities = Total Income
Total income - Administrative expense - Other provisions - Other charges + share of
income = Profit before tax
Profit before tax - Tax = Profit after tax or net income
And net sale = Mark up Revenue
Net Sale/Total Asset:
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Total Assets: Cash and balances with treasury banks + Balances with other banks +
lending to financial institution + Investment+ Advances + Other asset + Operating fixed
asset + Defferd tax asset-net
Graphical Presentation of DuPont Return on Assets
Interpretation: As we see in graph and table the DuPont Return on Assets ratio decreases in 2008 and
2010 as compare to 2009 it means in year 2009 the DuPont Return on Assets ratio is high
as compare to 2008 and 2010 it happens due to increase in mark-up revenue.
Name of ratio
• Operating Income Margin
Formula: Operating income margin = (EBIT/ Net Sales)*100
Show in table
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Years 2008 2009 2010
EBIT ‘a’ 46,885,766 61,789,822 69,665,595
Net Sales ‘b’ 60,942,798 77,947,697 88,472,134
Operating
income margin
‘a/b’
76.93% 79.27% 78.74%
Working:
Revenue – Markup Expenses = Gross profit
Gross profit - (Provision for advances + Provision for investment + Provision lending to
financial institution + Bad debts written off) = Net mark-up income
Net mark-up income + Fee & commission + Dividend income + Exchange income +
other income + Gain on sale of Securities = Total income
Total Income - Administrative expense - Other provisions - Other charges + share of
income= Profit before tax
EBIT = Profit before Taxation + Interest expenses
Net Sale= Mark up revenue
Graphical Presentation of Operating Income Margin
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Interpretation:
As we see in graph and table the Operating income margin is decreasing over the year
2008 and 2010 as compare to 2009 it happens due to increasing of sale more quickly than
to operating profit.
Name of ratio
• Return on Operating Assets
Formula: Return on Operating Assets = (EBIT/ Operating Assets)*100
Show in table
Years 2008 2009 2010
EBIT ‘a’ 46,885,766 61,789,822 69,665,595
Operating Assets
‘b’
560,836,308 635,805,667 642,862,306
Return on Operating
Assets ‘(a/b)*100’
8.36% 9.72% 10.84%
Working:
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Revenue – Markup Expenses = Gross profit
Gross profit - (Provision for advances + Provision for investment + Provision lending to
financial institution + Bad debts written off) = Net mark-up income
Net mark-up income + Fee & commission+ Dividend income + Exchange income +
Other income + gain on sale of securities = Total income
Total income- Administrative expense - Other provisions - Other charges + share of
income = Profit before tax
EBIT = Profit before Taxation + Interest expenses
Operating Assets = Cash and balances with treasury banks + Lending to financial
institutions + Advances – net + Operating fixed assets
Graphical Presentation of Return on Operating Assets
Interpretation:
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As we see in table and graph the Return on operating asset is increasing every year so
Return on operating asset ratio is moving towards low which indicates that the Company
must give attention towards its usage of operational asset.
Name of ratio
• Return on Total Equity
Formula: Return on Equity = (Net income/Shareholder’s equity)*100
Show in table
Year 2008 2009 2010
Net income ‘a’ 15,458,590 17,561,846 17,563,214
Shareholder’s
equity ‘b’
81,497,458
94,265,853 103,880,048
Return on
Equity ‘a/b’
18.97% 18.63% 16.91%
Working:
Net profit or net income is the profit after tax which is obtained as Mark up Revenue -
Markup Expenses = Gross profit
Gross profit - (Provision for advances + Provision for investment + Provision lending to
financial institution + Bad debts written off) = Net mark - up income
Net mark - up Income + Fee & commission + Dividend income + Exchange income +
other income + Gain on sale of Securities = Total Income Total income - Administrative
expense - Other provisions - Other charges + share of income = Profit before tax
Profit before tax- tax= Profit after tax or Net income
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Shareholder’s equity =Share capital+ reserves+ unappropriated profit + surplus on
revaluation of fixed assets.
Source:Change in equity statement under the head 20.2
Graphical Presentation of Return on Equity
Interpretation: Return on Equity (ROE) tells us how much profit a company earned in comparison to the
total amount of shareholders’ equity. In 2008 it was 18.99; it slightly decreases in 2009
by 18.65% and again decreases in 2010 by 16.93%.
Name of ratio
• Gross Profit MarginFormula: GROSS PROFIT MARGIN = (Gross Profit / Net Sales)*100 Show in table
Year 2008 2009 2010
Gross Profit ‘a’ 37,058, 030 37,458,048 43,221,658
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Net Sales ‘b’ 60,942,798 77,947,697 88,472,134
Gross Profit
Margin Ratio
‘(a/b)*100
60.81% 48.06% 48.85%
Working:
Gross profit = Mark up revenue - Mark up expenses
Net Sale = Mark up Revenue
Graphical Presentation of Gross Profit Margin Ratio
Interpretation: In 2008 the profit margin ratio is 60.381 abut in 2009 and 2010 it shows decreasing trend.
It is due to increasing of mark up expenses more quickly than mark up revenue.
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d) Activity Ratios
Activity ratios measure a firm's ability to convert
different accounts within their balance sheets into cash
or sales.
These include:
• Total Assets Turnover
• Fixed Assets TurnoverNAME OF RATIO
• Total Assets Turnover
FORMULA: TOTAL ASSET TURNOVER RATIO = Net sales / Total Assets
Show in tableYEAR 2008 2009 2010
Net sales ‘a’ 60,942,798 77,947,697 88,472,134
Total Assets ‘b’ 817,758,326 944,582,762 1,035,024,680
Total Assets
Turnover ‘a/ b’
0.0745 Times 0.0825 Times 0.0855 Times
Working:
Net sale = Mark up Revenue / Interest Earn / Return
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Total Assets: Cash and balances with treasury banks + Balances with other banks +
lending to financial institution + Investment + Advances + Other asset + operating fixed
asset + Defferd tax asset-net
Graphical Presentation of Total Assets Turnover
Interpretation: Total Assets Turnover ratio of all three years shows the increasing trend in 2008, 2009
and 2010. The trend shows that bank is using its assets well because it is contributing
more towards sales. As we see in year 2010 the Total Assets Turnover is little bit increase
as compare to other two years.
Name of ratio
• Fixed Assets Turnover
Formula: Fixed Assets turnover = Net Sales / Fixed AssetsShow in table
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Year 2008 2009 2010
Net sales ‘a’ 60,942,798 77,947,697 88,472,134
Fixed assets ‘b’ 24,217,655 25,147,192 341,560,700
Fixed Assets
turnover ‘a/ b’
2.52 Times 3.10 Times 3.29 Times
Working:
Fixed Asset = Operating Fixed Assets
Net Sale = Mark up revenue / Return / Interest Earn
Graphical Presentation of Fixed Assets turnover
Interpretation: This Fixed Assets turnover ratio shows increasing trend in every year like in 2008 Fixed
Assets turnover is 2.52 times and its increases in 2009 up to 3.10 times and it also and
more increase as compare to 2008 and 2009 up to 3.29 times. Fixed assets usage is
satisfactory because these are contributing more towards sales.
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e) Market Ratios
Market ratios are commonly used by the investors to
assess the performance of a business as an investment
and also the cost of issuing stock.
These include:
• Dividend per share
• Earning per Share
• Price/Earning Ratio
Name of ratio
• Dividend per share
Formula: Dividend per share = Dividend paid to share holder /
Average common share outstandingShow in table
Year 2008 2009 2010
Dividend paid to
shareholder
6,104,894 5,820,338 8,060,510
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Avg. common
share outstanding
896975 1076370 1345463
Dividend per share 6.81 Rs. 5.41 Rs. 5.991 Rs.
Working
Avg. common share outstanding= Share capital amount / Par value of share
Year 2008 2009 2010
Avg. common
share outstanding
=8,969,751/10
=896975.1
896975
=10,763,702/10
=1076370.2
1076370
=13,454,628/10
=1345462.8
1345463
Graphical Presentation of Dividend per share
Interpretation: The given graph and table shows that in year 2008 the Dividend per share is 6.81 but
it decrease in 2009 and again increase in 2010. Dividend per share ratio informs about
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the price of shares in the market also tells the value of the bank’s shares price. This
ratio for the bank is rising 2010 as compared to the 2008, 2009.
Name of ratio
• Earning per Share
Formula: Earning per Share = Profit Available to shareholders or Net income after tax/ No of shares outstanding
Show in table
Year 2008 2009 2010
Net income after
tax
15458590 17561846 17563214
No of shares
outstanding
896975 1076370 1345463
Earning per Share 17.23 Rs. 16.32 Rs. 13.05 Rs.
Working
Net Income:Net profit or net income is the profit after tax which is obtained as mark up revenue –
markup expenses = Gross profit
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Gross profit - (Provision for advances + Provision for investment + Provision lending to
financial institution + Bad debts written off) = Net mark-up income
Net mark-up Income + Fee & commission + Dividend income + Exchange income +
Other income+ gain on sale of securities = total income
Total income - Administrative expense - Other provisions - Other charges + share of
income=profit before tax
Profit before tax- tax = Profit after tax or net income
No. of share Outstanding = Share capital amount / Par value of share
Graphical Presentation of Earning per Share
Interpretation
Earnings per share serve as an indicator of a company's profitability. The reason of
increase earning per share is to increase the net income of the company and the reason of
fallen earning per share is that net income is decreasing and the outstanding share of the
company. After 2008 its decreases in 2009 and 2010
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Name of ratio
• Price/Earning Ratio
Formula: Price Earning Ratio = Current market Share price / Earning per Share
Show in table
Year 2008 2009 2010
Market value per
share
50.32 74.37 76.82
Earning per Shares 17.23% 16.32% 13.05%
Price Earning
Ratio
2.9205 Rs. 4.5570 Rs. 5.8866 Rs.
Working
Source:Current market Share price from http://www.kse.com.pk/
EPS is available in balance sheet.
Graphical Presentation of Earning per Share
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Interpretation
The Price Earning ratio is greater in 2010 as compare to 2009 and 2008. Price Earning
ratio doesn't tell us the whole story by itself. It is usually useful to compare the Price
Earning ratios of one company to other companies in the same industry
13. Future Prospects of the Organization
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Am doing internship in national bank of Pakistan and observed during internship and see
detail in NBP websites and internet that the future of National Bank of Pakistan is vary
bright and the expansion of NBP is increasing day by day and during the calculation of
ratio I observed that the earning of NBP is high as compare to base or previous years. The
most three ratios to check the future prospects of the entity and all three ratios shows
increase every year these there ratios are current asset ratio, Working capital, Gross Profit
Ratio. But NBP is gearing challenges faced by the domestic banking industry due to
innovation and advancement in international banking.
The future of NBP is bright and NBP is maintaining its position to set higher standard of
achievement because when I calculate the ratios all represent increasing moment and all
are positive it means the bank has capability to pay off and its debt is also superb.The
actions taken by current management provide a great opportunity for NBP for making it
future prosper and can make NBP not less than any modern commercialize bank in
Pakistan.
14. Conclusion
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I am doing my internship program in the largest Government bank of Pakistan its
National Bank of Pakistan. NBP is one of the leading banks in banking sector. During my
stay of 6 weeks at NBP it’s my 1st practical life experience, I learnt a lot of task, many
professional skills. I also learned about how to deal with public. NBP has 1254
nationwide and almost 25 branches operating in other foreign countries including USA,
China, France, Hong Kong, Azerbaijan, Bangladesh, and Hong Kong. National bank of
Pakistan is one of the biggest online banks in Pakistan. NBP is a government bank that
why it works according to rules set by the state bank of Pakistan. NBP is also involved in
commercial banking. It is a part of State Bank of Pakistan and it is its major strength.
National Bank of Pakistan establish in the National Bank of Pakistan ordinance 1949.
Am doing my internship in NBP if I say the future of NBP is bright it will not be wrong.
I observed during my training in NBP the paper work of NBP is awesome but now a day
of technology the technology is an impact to survive in the market and to be in
competition. Every organization has some weakness and during my internship in NBP F-
10 branch Islamabad I also observed it covers all its weakness and take opportunities at
right time surely it can be in the way of progress insh Allah and will contribute in overall
progress of NBP at national level as well as the international level.
When I calculate the Ratio analysis of National Bank of Pakistan it shows that NBP is a
most rising bank with highest return on capital, largest market share amongst all Banks in
Pakistan. NBP carries highest cost to Income ratio as compare to all other commercial
banks. But still thinks that there is need for development to overcome on weaknesses in
order to keep its position as an excellent in banking field.
Keeping in view the financial ratios it is observed that Net assets of the NBP are
increasing day by day. The net profit is also increasing which may attract the investors.
The profit of national bank of Pakistan is also increasing day by day that attract the
customers and investors. This ratio of NBP is increasing which shows large numbers of
the assets are financed by the debts which is not good. Positive working capital ratio
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shows that its assets are more than liabilities, so the bank is capable to pay its liabilities.
Ratio shows that NBP is utilizing its Assets efficiently. NBP should fully concentrate to
improve its performance and standards to meet the challenges by the economy as well as
by the competitors and for this purpose it needs to overcome the problems and improve
the quality of services specially in advance section, that will prevent it from huge losses.
15. Recommendations for Improvement
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Improve its EPS because its shows company
profitability.
Increase sale and reduce expenses to earn
better profit margin
Improve liquidity position by increasing its
sale
Increase the current assets as compared to
current liabilities
Proper training of staff members
Prevailing friendly environment
Complaint counter should be available
Working capital should be positive .
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16. Reference & Sources used
Website of National Bank of Pakistan www.nbp.com.pk
Annual Report of National Bank of Pakistan
Newspaper Dawn
Newspaper The Nation
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Newspaper Business Recorder
Miss Asia Aslam (Branch Manager)
Auditor’s report of National Bank of Pakistan
Searching from different websites from Internet
17. Annexes
http://www.nbp.com.pk/Publications/index.aspx
http://www.nbp.com.pk/Publications/AnReport2008.aspx
http://www.nbp.com.pk/Publications/AnReport2009.aspx
http://www.nbp.com.pk/Publications/AnReport2010.aspx
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