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 a bank 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.

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.

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 i on 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 million consists of paid up capital by shareholders and Tk.1777.32 million represents reserves and retained earnings. The ba n k'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 technolog y is alwa y s 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.

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.

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.

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 of Savings Deposit is 5.50%.

We have formulated the following Savings Schemes 01. Contributory Service Scheme 02. Education Savings Scheme

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

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. 2. 3. 4. 5. 1. All activities are conducted according to Islamic Shariah. Interest free monetary operations. Building partnership relation between the Bank and its customers. Following Islamic principles in its investment portfolio. While investing special consideration to social needs is given. 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.

Service Portfolio: Prime Bank Limited provides following services under Islamic Banking: 1. 1. 2. 1. Deposit Investment Foreign Trade Remittance and Fund Transfer

Weight age Principle in Distributing Profit to the Depositors:

Deposit of Deposit Types 1. different Mudaraba saving deposite

2. 3. 4. 5. 6. 7. 8. 9.

Weight age 0.75 0;52 1.00 0.98 0 96 0.92 0.88 1.05 1.02 1.20 1.20 1.05 1.05

Final rate of profit for 2005 p 6.25 4.15%, - 5. 15% 8.60%-10.75% 8.60%-10.75% 8.60%-10.75% 7.85%-10.50% 7.60%-10.50% 9.00% - 9.15% 9.00%-9.15% 10.75%-11.25% 9.00%-9.15% 9.00%-9.50% 9.00%-9.50%

M udaraba Short Term Deposi ts Mudaraba-Tarm. Deposits for 36 month Mudaraba Term Deposits for 24 month Mudaraba term deposits for 1 2 m o n t h mudaraba term. Deposits for 6 month mudaraba term. Deposits for 3 month Mudaraba Contributory Savings scheme Mudaraba monthly profit deposits scheme Mudaraba Hajj Savings Scheme Mudaraba Special deposit scheme Lakphoti deposit scheme

10. Muda'raba Education saving scheme

11.
12.

13.

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)

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

 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 go!
that

travels with you, anywhere you

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. I Core & TK. 25 Core & TK. 50 Core & 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 4.00% P.a 4.25% P.a '4.50% P.a 4.75% P.a5.00 a

TK. 100 & Above 5.00i P.a

Premier 50+ Account If you 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 highest profit on daily closing balance (5,751/'0' P.a),
Discount on VISA Debit Card and other attractive facilities. Foreign Currency (FC) Account

Forei gn 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 C u rrenc y Deposit (NFCD) Accounts, Other account includes Convertible Taka Account Natick is an account in Taka and the account holder has the option to

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: ,1=><3 Months 3=><6 Months 6=><12 Months 12 Months Effective Date

Amount
~

For Any Amount

Monthly Income Scheme Your savings are precious! Let your investment generate a regular monthly income for you. Deposit a certain amount at the opening and earn monthly profit till the tenure completes. You will get back principal amount on maturity. Years Deposit Amount (TL) 50000.00 or it's multiple Interest per Month (Tk.) Effective Date 500.00 or it's multiple 2011-03-16

Monthly Savings Scheme A regular savings pays off when you really need it.. Save small amount in your account each month and let your savings grow with time through owe- Monthly Savings Scheme. Installment (TK) 500.00 or it's multiple 3 years Amount at Maturity (TK) 21500.00 or it's multiple 5 years Amount at Maturity (TK) 40500.00 or it's multiple
7

Effective Date 2011-03- 16

Double Benefit Scheme Under this scheme, any deposit becomes double after 7 years and

Months. It accepts deposit in multiples of Tk. 10,000. A specially designed instrument shall be issued for the deposit under this scheme in the same manner as issued in case of Fixed Deposit. The instrument is not transferable and renewable. In case of premature encashment after 3 months, benefits may be allowed
on

the deposit amount at prevailing savings rate. Loan facility

may be allowed up to 80% of deposit against lien/pledge or, such instrument at bank's prescribed rates.

Years

Deposit Amount (TK)

Maturity Amount (Tk.) Effective Date

(~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) 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 278000.00 416500.00 560000.00 190000.00 380000.00 573500.00 253500.00 490000.00 760500.00 1005000.00

Effective
Date

2009-0608 2009-0608 2009-0608 2009-0608 2009-0608

2000.00 3000.00 4000.00 5000.00

150500.00 226500.00 302000.00 377000.00

694500.00

960000.00

1267000.00

Loan Products: Personal Loan Our Personal Loan is an) , purpose loan for you. The purpose could be an y thing valid from buying household appliances to emergency of l g oods, House/Office agency medical needs. Some of these cou d be: Purchase o17, Electronic Renovation, Marriages in t h e 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

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 Operated by the registered Doctors may Diagnostic 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

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 appl y along with estimate of education expense in a prescribed form to any branches of the Bank duly recommended by the Head of the Department Head of the Education
or

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 billing 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 the Card. Rates and other facilities are highly competitive in the market.

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 meet your 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:

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

The formula for return on assets is:

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 ton of money at a problem, but very few managers excel at making large profits with little investment.

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

ROE is expressed as a percentage and calculated as: Return on Equity = Net Income/Shareholder's Equity

Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends to preferred stock,) Shareholder's equity does not include preferred shares.

The ROE is useful for comparing the profitability of a company to that of other firms in the same industry. Return On Investment ROI: A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment-, the result is expressed as a percentage or a ratio.

The return on investment formula:

ROI= (Gain from Investment - Cost of Investment} Cost of Investment

In the above formula "gains from investment", refers to the proceeds obtained from selling the investment of interest. Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are

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:

Current Ratio - Current Assets Current 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

there are many ways to access financing - but it is definitely not a good sign.

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

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

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 financing its 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.

Profit Margin: Profit margin, net margin, net profit margin or net 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: ! n A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. 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 will usually see higher profit margins.

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

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 r a t i o =

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:

Publicly traded companies often make periodic quarterly or yearly cash payments to thenOwners, 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 per share.

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

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 Total Assets

Prime bank Ltd. Premier bank Ltd.

2006 2.05 1.36

2007 1.19 .24

2008 1.30 1.68

2009 2.37 2.30

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 31.55 22.67 2007 30.68 3.19 2008 20.58 20.88 2009 30.19 23.47

Prime bank Ltd. Premier bank Ltd,

By considering ROE, the best performance in 2009 is prime 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 y B Considering Current Ratio, in 2006 2007 and 2008 the highest performance done by Premier Bank ltd

Debt equity ratio:

Total Liabilities
Shareholders Equity

2006 Prime bank Ltd. Premier bank Ltd. 147.7 157.00

2007 140.9 122.1

2008 154.7 114.20

2009 959.00 910.70

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

bank