Ratio Analysis Of Al Falah And Js Bank Finance Essay

Ratio analysis is a method that involves spliting fiscal statements of a house into one another and is utile in analyzing in finding the fiscal tendencies of a company within its fiscal twelvemonth. In our survey we will be able to reexamine the fiscal statement of the companies in the banking sector and they include the criterion chartered bank, the bank Al falah and eventually JS bank

Company DESCRIPTIONS

JS bank is a limited company and is normally a subordinate of the JS group and its beginning is Pakistan and it is among the most diversified and increasingly financially turning companies in Pakistan. The JS group has of tardily expanded its concerns into the banking sector and has introduced the JS bank whose chief aim is client satisfaction. Its formation came after the meeting and merger of the commercial bank operations of the American express bank limited based in Pakistan and the jahangiar siddiqui investing bank limited in December thirtieth 2006.

Bank Al falah is besides a Pakistan based private bank which is owned by the Abu Dhabi group. This bank was officially incorporated in 1997 under company ‘s regulation as a populace limited company. It is normally involved commercial banking and besides other related services as outlined by the company ‘s regulation of 1962. After several old ages the bank was privatized and it hence acquired a new individuality known as H.C.E.B and its directors had come up with policies that would hold ensured that the bank is a major participant in the market.

The criterion chartered bank was founded in 1969 after there was a meeting of two Bankss which include the chattered bank of India which was formed in 1853 by James Wilson after he was granted permission with Queen Victoria and the standard bank of British South African which had been founded in the twelvemonth 1863. The ground for the meeting of these two Bankss was so as to increase its net incomes and besides so as to capitalise on the enlargement in the trade sector

LIQUIDITY RATIO ANALYSIS

In our survey we are traveling to compare the fiscal public presentation of the three Bankss. We are two compare the liquidness ratios of the companies which will help us in finding the fiscal place of the company for the period stoping 30th September 2009. In the computation of the current ratio the findings were as follows: –

Standard chartered bank – 27.62

The bank alfalah – 32.34

The JS bank – 46.10

Therefore from the above ratios were can reason that criterion chartered bank has a lower ratio since it has higher current assets in stock compared to the other two Bankss hence it is better for investing in the long tally but non in the short tally. The current ratio of JS bank is suited for investing in the short tally but non in the long tally

The following ratio that we will measure is the debt ratios of the three Bankss and the information is as follows: –

Standard chartered bank – 5.97 %

Bank alfalah – 16.01 %

JS Bank – 3.6 %

From the consequences above it is clear that the debt ratio of criterion chartered bank is greater than JS bank but lower than bank alfalah. Therefore in decision the debt ratio of JS bank may be lower since it may be new in the market while that of bank alfalah is higher since it has lower equity and liabilities than the remainder.

PROFITABILITY RATIO ANALYSIS

We will besides reexamine the assorted profitableness ratios of the company which will enable us to find the public presentation of the company during the period. For case the earning per portion ratio of the companies is every bit follows

Standard chartered – 0.003

Bank alfalah – 1.16

JS bank – -0.57

The ratio of the criterion chartered bank is lower than that of bank alfalah but its issued capital when compared to the latter is higher. The issued capital of bank alfalah is lower even to that of JS bank but it still has a higher ratio this is because it has a higher net net income hence it illustrates its good public presentation. The ratio of JS Bank is negative since it was doing Looss

The return on assets of the three companies when computed it gives the consequences as shown below: –

Standard chartered bank – 0.04 %

Bank alfalah – 0.13 %

JS bank – -1.16 %

The bank alfalah has a higher net net income compared with assets to the remainder of the Bankss. The JS bank is executing ill due to the high involvement disbursals it has incurred. Standard chartered is executing much better compared to JS bank but lower compared to bank alfalah

The return on the equity ratios of the companies is every bit follows: –

Standard chartered bank – 0.30 %

Bank alfalah – 4.48 %

JS bank – -5.40 %

Standard chartered bank has three times greater stock equity compared to bank alfalah but its ratio with net income is lower compared to the latter since it is doing net incomes. The ground for negative value of JS bank is due to losingss it ‘s incurring

Market RATIO ANALYSIS

The concluding ratio in our analysis is the market ratio and specifically the monetary value net incomes ratio and the consequences of the three companies are analyzed as below: –

Standard chartered bank – 23

Bank alfalah – 40

JS Bank – 9.5

Investors are merely willing to pay 23 rupees for criterion chattered compared to 40 rupees which the investors may portion with since the company is turning. For JS bank the investors may merely pay 9 rupees since the company is executing ill

Decision

From our findings the bank alfalah is better compared to the two Bankss followed by the criterion chartered bank and eventually the JS bank. The investors may prefer puting in bank alfalah since it is executing better and its net net income is high