3.1 Analysis Ø Specialized Analysis o Cash Forecasts

3.1 Financial Performance Analysis:Financialperformance analysis is the process of determining the operating and financialcharacteristics of a firm from financial statements. It is also known as theprocess of identifying the financial strengths and weaknesses of the firm byproperly establishing the relationship between the items of balance sheet andprofit & loss account. The goal of such analysis is to determine theefficiency and performance of firm’s management, as reflected in the financialrecords and reports. 3.2 Principal Tools of financial Performance Analysis:Inthe analysis of financial performance, there are available a variety of toolsfrom which one can choose those best suited for one’s specific purposes.

Thesefinancial analysis tools are useful for discovering both internal and externalinformation related to a specific business organization. The analysis andinterpretation of financial statement is used to determine the financialposition and results of operations as well. The following are the tools thatare used for analyzing the financial performance of an organization:Ø  ComparativeFinancial StatementsØ  TrendAnalysisØ  Common-sizeFinancial StatementsØ  RatioAnalysisØ  CrossSectional AnalysisØ  SpecializedAnalysiso  Cash Forecastso  Analysis of Changes in Cash Flowso  Statements of Variation in GrossMargin o Break-even AnalysisAmongthese tools, Ratio Analysis, Comparative Analysis has been chosen for analyzingthe financial performance of Social Islami Bank Limited.3.3 Ratio Analysis:Aratio analysis is a quantitative analysis of information contained in acompany’s financial statements. Ratio analysis is based on line items in financial statementslike the balance sheet, income statement andcash flow statement. Ratio analysis is used to evaluate various aspects of acompany’s operating and financialperformance such as its efficiency, liquidity, profitabilityand solvency.

Thetrend of these ratios over time is studied to check whether they are improvingor deteriorating. Ratios are also compared across different companies in thesame sector to see how they stack up, and to get an idea of comparative valuations. Ratioanalysis is a cornerstone of fundamentalanalysis. 3.4 Analysis of Financial Performance of SIBL:Now,by using the ratio analysis and trend analysis the financial performance ofSocial Islami Bank Limited is analyzed below:        3.

4.1 Current Ratio:DataPresentation:Following is the current asset andcurrent liabilities of Social Islami Bank Limited from year 2012 to 2016 (InMillion). Year   Current Asset   Current Liability   Current Ratio                     2012   11,125.08     4700   2.37                     8,895.00     4700       2013         1.

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89                 2014 9,474.25   6150   1.54                   2015 6,586.

72   1000   6.59                                 2016 17,947.66   3000   5.98                     Source: Annual Report of SIBL (2012-2016)Table 3.4.

1:Current ratios of SIBL (2012-2016)GraphicalRepresentation:Current ratio ofSocial Islami Bank Limited can be shown by the following figure:Figure 3.4.1:Current Ratio of SIBLResultInterpretation:Thehigher the current ratio, the more liquid the firm is considered to be.

But thehigher current ratio can be a signal that the company has problem or may not beefficient in using its current assets. The figure covers the years from 2012 to2016. In 2015 the ratio was highest among the last five years and it decreasedover the next years. 3.

4.2 Return on Assets – ROA:DataPresentation:Followingis the net income and total asset of Social Islami Bank Limited from year 2012to 2016 (In Million). Year Net Income Total Asset ROA         2012 1,465.22 114,829.11 1.27%         2013 1,252.

13 126,616.56 0.99%                 2014 1,928.39 153,737..45 1.

25%         2015 2,046.30 180,112.11 1.14%         2016 2,291.05 227,704.18 1.00%         Source: AnnualReport of SIBL (2012-2016)Table 3.4.

2: Returnon Asset of SIBL (2012-2016)Graphical Representation:Returnon asset of Social Islami Bank Limited can be shown by the following figure: Figure 3.4.2:Return on Asset-ROA of SIBL ResultInterpretation:Theabove figure shows that the return of asset of SIBL is not stable. The figureshows ROA from 2012 to 2016. Among these years 2012 has the highest ROA 1.27%,which means in this year the company has increased profitability. In the year 2013the company has the lowest ROA 0.

99%; it indicates that the profitability of SIBLis negative. And at the year 2014, it represents an increasing ROA for SIBL.    3.4.

3 Earning Per Share:DataPresentation:Followingis the net income and no. of share outstanding of Social Islami Bank Limitedfrom year 2012 to 2016. Year Net Income No.

of Share Outstanding EPS         2012 1,465,218,037 701,100,253 2.25         2013 1,252,134,320 703,141,564 1.74         2014 1,928,385,396 703,141,564 2.

74         2015 2,046,298,776 738,298,642 2.77         2016 2,291,047,837 738,298,642 3.10         Source: Annual Report of SIBL(2012-2016)Table 3.4.3:Earning per share of SIBL (2012-2016)GraphicalRepresentation:Earningsper share of Social Islami Bank Limited can be shown by the following figure:Figure 3.

4.3:Earning Per Share of Social Islami Bank LimitedResultInterpretation:Amongthe last 5 years, year 2016 has the highest EPS. In the year 2013 we can see alowest EPS of SIBL. The EPS growth rate is Decreasing and in the year 2015 theEPS was 1.77. 3.4.

4 Net Working Capital:DataPresentation:Followingis the current asset and current liabilities of Social Islami Bank Limited fromyear 2012 to 2016 (In Million). Year Current Assets Current Liabilities Net Working Capital         2012 11,125.04 4700 6,425.08         2013 8,895.00 4700 4,195.00                 2014 9,474.25 6150 3,324.

25                 2015 6,586.72 1000 5,586.72         2016 17,947.66 3000 14,947.66         Source:Annual Report of SIBL (2012-2016)Table 3.4.4: Networking capital of SIBL (2012-2016)   GraphicalRepresentation:Networking capital of Social Islami Bank Limited can be shown by the followingfigure:Figure 3.4.

4: NetWorking Capital of SIBLResult Interpretation:Since2012-2016 SIBL’s current assets exceed its current liabilities so net workingcapital is positive. Year 2016 shows the highest net working capital and year2014 shows the lowest net working capital. The overall trend of net workingcapital is satisfactory.

        3.4.5 Return on Equity – ROE:DataPresentation:Followingis the net income and total equity of Social Islami Bank Limited from year 2012to 2016 (In Million). Year Net Income Total Equity ROE         2012 1,465.22 10,152.93 14.43%         2013 1,252.13 11,087.

44 11.29%         2014 1,928.39 12,172.99 15.84%         2015 2,046.30 12,955.

11 15.80%                 2016 2,291.05 14,193.

33 16.14%         Source: Annual Report of SIBL(2012-2016)Table 3.4.5: Returnon Equity of SIBL (2012-2016)GraphicalRepresentation:Returnon equity of Social Islami Bank Limited can be shown by the following figure:Figure 3.4.5: Return on Equity-ROE of Social Islami BankLimitedResultInterpretation:Theoverall ROE of SIBL is satisfactory.

Year 2016 shows the highest ROE and year2013 shows the lowest ROE. The ROE increases in the last year compare to theyear 2015. 3.4.6Debt to Equity Ratio:Data Presentation:Following is the total debt and total equity of Social IslamiBank Limited from year 2012 to 2016 (In Million).  Year Total Debt Total Equity Debt to Equity 2012 104,676.18 10,152.

93 10.31 2013 105,313.95 11,087.44 9.50 2014 141,412.

32 12,172.99 11.62 2015 167,053.53 12,955.

11 12.89 2016 213,621.97 14,193.33 15.05  Source: AnnualReport of SIBL (2012-2016)Table 3.

4.6: Debtto Equity Ratio of SIBL (2012-2016)  Graphical Representation:Debt to Equity Ratio of SocialIslami Bank Limited can be shown by the following figure: Figure 3.4.

6: Debtto Equity Ratio of Social Islami Bank Limited  Result Interpretation:The Year 2013shows the lowest debt equity ratio after 2012. But, from the above chat it isvisible that the debt equity ratio is gradually increasing and it reached atthe highest level in 2016. 3.4.7 Loan to Deposit Ratio (LTD): Data Presentation:Following is the total loan-to-deposit ratio (LTD) of SocialIslami Bank Limited from year 2012 to 2016 (In Million).

  Year Total Loan Total Deposit Loan to Deposit(%) 2012 66,459.10 93,276.84 71.25% 2013 76,348.58 101,842.17 74.97% 2014 98,511.13 124,265.

07 79.27% 2015 123,630.22 149,773.62 82.

54% 2016 167,001.33 190,564.52 87.64% Source: Annual Report of SIBL (2012-2016)Table 3.4.

7: Loan-to-Deposit Ratio of SIBL (2012-2016)Graphical Representation:Loan to DepositRatio of Social Islami Bank Limited can be shown by the following figure:  Figure 3.4.7: Loanto Deposit Ratio of Social Islami Bank LimitedResult Interpretation:The loan to deposit ratio of SocialIslami Bank Limited shows that it was highest in the year 2016 and lowest inyear 2012 among the last five years. In 2016, the ratio is 87.

64%. The trend ofthe ratio is showing that the loan to deposit ratio was increasing year byyear. 3.4.8 Net Profit Margin Ratio: Data Presentation:Following is the net profit and operating income of SocialIslami Bank Limited from year 2012 to 2016 (In Million).

  Year Net Profit Operating Income Net Profit Margin(%) 2012 1,465.22 5,549.45 26.40% 2013 1,252.

13 5,560.46 22.52% 2014 1,928.

39 6,798.43 28.37% 2015 2,046.30 8,279.87 24.71% 2016 2,291.05 9,714.

42 23.58%  Source: AnnualReport of SIBL (2012-2016)Table 3.4.8: Net Profit Margin Ratio ofSIBL (2012-2016)       Graphical Representation: Net Profit MarginRatio of Social Islami Bank Limited can be shown by the following figure:  Figure 3.4.8: NetProfit Margin Ratio of Social Islami Bank Limited  Result Interpretation:The net profit margin ratio of SIBL showsthat, in the year 2014 the ratio was highest i.e.

28.37% and in the year 2013the ratio was lowest i.e. 22.52%. In 2015, the ratio was 24.71% and in 2016 itdecreases by 1.

13%. 3.4.9 Time Interested Earned Ratio:Data Presentation:Followings are the interest expenses and EBIT of SocialIslami Bank Limited from year 2012 to 2016 (In Million).  Year EBIT Interest Expense Time Interest Earned Ratio 2012 2,772.15 360.

73 7.68 2013 2,058.94 565.29 3.64 2014 3,352.53 529.19 6.

34 2015 3,459.16 479.21 7.22 2016 4,205.21 623.

31 6.75  Source: Annual Report of SIBL (2012-2016)Table 3.4.9: Time Interest Earned Ratio ofSIBL (2012-2016) Graphical Representation: Time InterestEarned Ratio of Social Islami Bank Limited can be shown by the followingfigure: Figure 3.

4.9: Time Interest Earned Ratio of Social Islami Bank LimitedResult Interpretation:The graph shows the time interest earnedratio of SIBL from year 2012 to 2016. In the year 2012 the ratio was highestand in the year 2013 the ratio was lowest. The time interest ratio for the lastyear was 6.75. 3.

5 Comparative Analysis:Comparative analysis, also described ascomparison analysis, is used to measure the financial relationships betweenvariables over two or more reporting periods. Businesses use comparativeanalysis as a way to identify their competitive positions and operating resultsover a defined period. Larger organizations may often comprise the resources toperform financial comparative analysis monthly or quarterly, but it isrecommended to perform an annual financial comparison analysis at a minimum.