Page 1

1.1 INTRODUCTION
Bank is the circulating agent of a country as like as blood of human body which developed
the economy and national wealth. It is the financial services industry approaching full
historical cycle. Originally the banking system operated as full service industry, performing
directly or indirectly all financial services. Banks are direct agents to create opportunities for
development in a country. It also provides large scale of employment opportunities. Banks
make profit by mobilize savings and make it advances to investors. As they deal with public
money, their form of business is different from others. It must refund publics money when
they demand, either it makes or not. So, productivity performance of bank should be analyzed
carefully.
The evaluation of bank productivity performance is a complex process involving interactions
between the internal operations, external activities and environment. The ultimate objective
of management is to maximize the value of banks equity shares by attaining the optimal mix
of returns and risks. In this respect bank management needs to develop a comprehensive plan
in order to identify objectives, goals, budgets and strategies that will be consistent with the
maximization of share values.
The primary method of evaluating productivity performance is to analyze accounting
statements. Financial ratios of accounting items permit an historical sketch of bank returns
and risks. External performance is best measured by evaluating the banks market share,
regulatory compliance and public confidence. Because of increasing innovation and
deregulation in the financial services industry, internal and external competitiveness is
become much more important than in the past.
In my Master Paper Report, I have selected one government commercial bank to evaluate the
performance in our banking industry. This is SONALI BANK LIMITED. This bank has a
great impact in our economy. To analyze SONALI BANK LIMITED productivity
performance it will be helpful to have an insight into the generalized characteristic features of
this bank. Sonali Bank became Sonali Bank Ltd. From 3 June, 2007.

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1.2 STATEMENT OF THE PROBLEM

All types of Bank are generally supposed to be established to earn profit and help economic
and financial activities in a country. In such a context, the main business of banking is to
provide credit to the borrowers and take deposit from customers. At the same time banks are
direct agents to create opportunities for development in a country and also provide large scale
of employment opportunities. Banks play the most important for development of a country. A
functionary of financial system of a country. SONALI BANK LTD. is the largest bank which
plays that role. It also plays a role in the economic development of a nation through saving
and credit. It diverts and allocation of the funds in all over country which are aimed to
develop countrys economy and adds to national wealth. The researcher wants to evaluate the
performance of the SONALI BANK LTD. The performance of Sonali Bank Ltd. is
satisfactory level or not. This is the main view of the study.

1.3 ORIGIN OF THE STUDY

As a student of Master of Business Administration (MBA) every student is required to
conduct a practical orientation in any organization for fulfilling the requirements of the
Internship Program. The main purpose of the program is to introduce the students with the
real world situation. This Internship Report is generated under the academic supervision of
Sultana shahida Abedin, Lecturer ,Faculty of Business Administration , Eastern University .
This report is prepared as the partial requirement of MBA degree. The topic is Financial
inclusion for Commercial banks Profitability and Growth.

1.4 BACKGROUND OF THE STUDY

Knowledge and learning become perfect when it is associated with theory and practice.
Theoretical knowledge gets its perfection with practical application. After the completion of
the semester courses of MBA. Program. This is an orientation to the particular Topic, which
settle by Honorable supervisor. While working, I can make a detail study and present my
understanding in this report about the productivity performance of Sonali Bank through
various ratios and with the help of possible hypothesis. This program brings me closer to the
practices in banking and helps to develop a little understanding about the performance of
Sonali Bank. This practical orientation is also a positive development in professional area.
Recognizing the importance of practical experience. In this state I have worked to reflect
entire efforts at analyzing the experience of practical orientation related to productive
activities of the bank.

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1.5 OBJECTIVES OF THE STUDIES

This study is intended for providing me invaluable practical knowledge about banking
operation system in Bangladesh. There are two types of objective 1.Broad 2. Specific
The broad objective of this report is to fulfill the requirement of MBA program and to apply
the theoretical knowledge gained from the coursework of the MBA program in a specific
field which will bring credit hours for getting MBA Degree.
However, the specific objectives are the followings:
To evaluate the performance of the bank in yearly transaction.
To evaluate the deposit mobilization performance of the Bank
Ratio analysis of bank.
To evaluate the loan disbursement performance of the Bank.
To evaluate the loan recovery performance of the bank.
To evaluate the performances of the banks under study
To evaluate the profitability performance of the Bank.
To find the trend of overall activities of the Sonali Bank Ltd. during the study period
To compare the activities of Sonali Banking
To find out the influencing factors of overall activities.
To find out the problems of the banks under study.
To recommend some possible measures to overcome the problems.
To know and outline the concept Sonali Bank ltd.
To identify specialized services rendered by the banks.

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1.6 RATIONAL OF THE STUDIES

Well- educated, dedicated, skilled and enterprising workforce is the sine-qua-non for the
progress and development of a service oriented industry like Bank. But in practical how it is
maintained & controlled, become unknown to me if I dont work on it. And how a bank
provides loan and what kinds of criteria are considered for sanctioning loan. If I could not get
opportunity to do intern in Sonali Bank, it was impossible to know deeply regarding all
activities of procedures. So it is rational and justified to conduct a study like this term paper
for better understanding on performance analysis of sonali bank

1.7 SCOPE OF THE STUDY

As I was an intern, my scope was limited and restricted for some purpose. I had
maintained some official formality for the collection of data of my report. This study will
give a clear idea about the financial performance of Sonali Bank Limited as well as the
different section of different products and services of Sonali Bank Limited. At last the
financial position of the bank in the banking industry based on its last five of years
performance.
Information availability.
Good communication system.
Have a wide area of gaining knowledge.
Good working environment.

1.8 LIMITATIONS OF THE STUDY

Despite all out co-ordination from the bank officials, researcher faced some limitations.
The notable some of these are as under:

Learning all the banking functions within just 60 days was really tough.

Another limitation of this report is Banks policy of not disclosing some data and
information for obvious reason, which could be very much useful.

In case of performance analysis secondary data are used.

Only five years accounting data are considered for productivity performance
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This study completely depended on official records and annual reports.

To prepare an analytical report need financial assistance. The financial assistance

provided by the department is insufficient. In perspective of lack sufficient money,
various types of analysis did not become possible.

Another problem is that communication gap. The department should be conducted

with the company at least one month ago.

The branch does not maintain accounting system properly. So, many up date data

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2.1 ABOUT THE ORGANIZATION

Sonali Bank, the largest commercial bank in the country, was established under Bangladesh
Banks (Nationalization) Order 1972 (Presidency Order No. 26 of 1972). By taking over
branches of former National Bank of Pakistan, Bank of Bahawalpur Limited and
Premier Bank Ltd. were two private banks performing class banking over the century in that
period and National Bank of Pakistan was government supported bank which was established
to finance the Jute Sector in East Pakistan in the early period of Pakistan. After the birth of
Bangladesh on 16th December 1971, newly formed Sonali Bank for mass banking got special
facilities from the government to work on behalf of Bangladesh Bank in those areas where
Bangladesh Bank is not available. With the increase of responsibility and by virtue of
performance within a few years, it becomes the largest commercial Bank of the country with
1181 branches up to now.

Corporate Profile
Name of the Company
Chairman

Sonali Bank Limited

Fazle kabir

CEO and Managing Director

Company Secretary :

Pradip Kumar Dutta

Legal Status

Public Limited Company

Emarged as Nationalised Commercial
Bank in 1972, following the
Bangladesh Bank (Nationalization)
Order No. 1972(PO No.26 of 1972)
03 June, 2007
15 November, 2007
35-42, 44 Motijheel Commercial Area,
Dhaka, Bangladesh
Taka 10.00 billion
Taka 09.00 billion
1181
9550426-31, 33, 34, 9552924
88-02-9561410, 9552007
BSONBDDH
www.sonalibank.com.bd

Date of Incorporation
Date of Vendor's Agreement
Registered Office
Authorised Capital
Paid-up Capital
Number of Branches
Phone-PABX
FAX
SWIFT
Website

Zaheed Hossain

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2.2 VISION & MISSION

Vision :
Socially committed leading banking institution with global presence.

Mission :
Dedicated to extend a whole range of quality products that support divergent needs of people
aiming at enriching their lives, creating value for the stakeholders and contributing towards
socio-economic development of the country.

2.3 MANAGEMENT
The management of the bank is vested on a Board of Directors, subject to overall supervision
and directions on policy matters by the board, which is constituted in terms of Bangladesh
Bank (Nationalization) Order 1972. Board of Directors, constituted by seven members, has
authority to organize, operate and manage its affairs on commercial consideration within the
Board policy of government. There are directors appointed by the government. Others
members of the Board including MD are also government appointed out of that at least three
have the experience in the field of Finance, Banking, Trade, Commerce, Industry and
Agriculture. The managing director is the Chief Executive of Bank. He executes all the
activities under the direction of Board. All line and staff personnel of Banks are own
recruitment except member of Board of Directors.

2.4 ORGANIZATION
Sonali Bank is the largest nationalized Commercial Bank of the country. It has extended 1181
branches through out the country and abroad to serve the nation. There are two, Sonali
Exchange Company Incorporations (SECI) in USA and others are in planning stage. The
Head Office of the bank is located at Motijheel Commercial Area, Dhaka that is the
controlling Headquarter (Figure-2.1). It has eight GM offices in six Divisional Headquarters
and twenty six Principal Offices and thirty two Regional Offices. Principal Office is headed
by DGM and each Department is headed by AGM. Different grade officers depending on the
size and nature of branch head the branches.
Principal Office Headquarter has jurisdiction over the entire area of a District i.e. the
Principal Office is the local point of the Banks administrative zone of the District. The
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Regional Office is situated in the Thana level within the District, is under control and
supervision of the Principal Office of the District. Regional Offices are responsible for their
activities to the Principal Office. Regional heads exercise control and supervision overall the
branches within their jurisdiction and keep the Head of Principal Office informed the
progress of their respective areas from time to time.

Head Office
G.M. Office
Principal Office
Regional Office
Branch
Figure 2-1: Functional Hierarchy

2.5 CUSTOMER SERVICES

To ensure qualified customer service Sonali Bank has started in addition to computerization
corporate client service and one stop service. To facilitate the foreign exchange activities
Sonali Bank has launched SWIFT (Society for Worldwide Inter bank Finance and
Telecommunication) system in its 12 branches. The bank has launched Website, Reuter
service, Internet service, and Ready cash service. The bank has taken a plan to launch shared
ATM system in various important places. Already, it has given work order for this.

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2.6 COMPUTARIZATION
Sonali bank starts its computerization process at December, 1989. After that it expands its
computerization process by establishing RISE System (RS 16000) OS/2, LAN etc. Up to this
time 113 branches are under computerized system. Besides this One Stop is being given in
its 56 branches. Moreover, Sonali Bank is serving to the customers in the following ways:
Foreign exchange business and standard of customer services is being increased
and speed up of information flow by using the computerization system LAN
(Local Area Network) and WAN (Wide Area Network).
It has established 7 subsidiary companies in United States named Sonali Exchange
Company Incorporated (SECI) and 5 offices of Sonali Bank, UK Ltd. establish
with 49% share with govt. in UK so that the Non-Resident Bangladeshi can send
their money to Bangladesh through a valid channel as fast as possible.
Recently SECI established a Web based Remittance Software in United States.
Sonali Bank Wage Earners Corporate Branch established electronic link with its
branch in Middle East Branch through which remittance is to be sent. Besides this
5 electronic link is in implementation process in Oman, Qatar and Bahrain.
IFRMS (Instant Financial Reconciliation and Messaging System) has enabled the
bank to remit fund by DD, TT, Inter branch Debit/Credit advice. This has been
started as an experimental but this system will be started among 300 branches
soon.

2.7 GOVERNMENT INTERVATION

Financial services have traditionally been the subject of close government scrutiny and it is to
be expected that exchange rates, interest rates and terms of credit should be closely monitored
in the public interest. In the recent years, however, governments have tried to use interest
rates, credit regulations and informal controls on banks as a means of managing the supply of
money in the economy in an effort to increase or reduce consumer spending and to hold back
or promote investment by business. During the 1976 to now, the effect of these policies has
been to add a new dimension of risk and uncertainty to financial markets which were already
fluctuation wildly because of the oil crisis, the commodity boom, increasing inflation and
controlled exchange rates.

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Besides government is a big problem for the nationalized bank in Bangladesh. Government
forced to the nationalized bank to insider lending, lend to governments priority sector, stateowned enterprises, sick industries, borrowers with political influence as well as provide
exemption schemes to fulfill its pre-election commitment. The loan exemption program of
1986-87and 1991-92 exempted 11.37 percent and 25.56 percent respectively of total bank
loan outstanding. As a result, nationalized commercial banks are burdened with very large
classified loans (32 percent of total loans) against which very large provisions had to be made
which affected profit position adversely. Classified loans in the countrys banking sector s on
June 30, 1996 amount to 33.0 percent of total loans. It was 34.9 percent as on December 31,
1993. However, net income of local banks is drastically reduced, as the required to maintain
very large provisions for bad debts and interest suspense accounts.

2.8 RURAL CREDIT

Bangladesh is primarily an agricultural country. A major portion of the population

( about

85%) live in the rural areas. About 75% of the active rural population depends on agriculture as
the main source of their livelihood. Agriculture contributes about 22% to the GDP. Majority of
the farmers are either small or marginal. So credit plays a paramount role to augment the capital
base to support agriculture production. With this end in view. Sonali Bank Limited the largest
state owned commercial bank has been playing a vital role in the socio-economic development
& poverty alleviation since 1973. Keeping in view that Credit is one of the many inputs that
complete the cycle of agricultural production Sonali Bank extending rural credit through 1179
branches over the country.
Sonali Bank Limited introduced indirect rural credit in 1973 through the then IRDP (Now
BRDB) there after continuing lending in the following programs:
01)

Crop

Loan

(Special

Agricultural

Credit

Program):

As per Government decision this program was introduced in

1977 to increase crop production (credit to subsistance and
marginal farmers as well as share-cropers for raising seasonal
crops). Now this program is continuing through 707 branches
among the farmers of 1639 unions. Recently Sonali Bank
Limited introduced Revolving Crop Credit Limit System from
one branch of each district.

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02) Special Investment Program: This program was introduced in

1993 for creating self employment by establishing small &
medium farms (Poultry, Dairy & Fishery) through bank finance.
Under this program credit is extended through 236 selected
branches over the country. Maximum ceiling of loan is Tk. 5.00
Lac.
03) Farming & off farming program: This program was
introduced in 1994 to involve unemployed rural people in income
generating activities (Poultry, Dairy, Fishery, Horticulture,
Nursery, Beef fattening) by establishing small & medium farms
through bank finance. Credit is extended through all branches
over the country. Maximum ceiling of loan is Tk.15.00 Lac.
04) Krishi Khamar Rin Karmasuchi (Proiect): This program was
introduced is 1993 for creating new employment, increase
national income & Socio economic development by establishing
medium & big project (Poultry, Dairy & Fishery) through bank
finance.
05) Pond Fisheries credit Program: This program was designed to
extend bank credit for pisciculture in derelict ponds/Tanks/water
bodies in 1977 Credit is extended through 200 branches over the
country. Maximum ceiling of loan is Tk.5.00 Lac.
06)Fertilizer Dealers Credit Program: This program was
introduced to extend bank credit among the approved fertilizer
dealers operating at primary distribution point of BADC for
lifting their quota of Fertilizer from BADc for ultimate
distribution among the farmers in 1981.
07) Sugarcane production loan program in mill Zone area:
This program was introduced in 1975 to increase sugar
production. Under this program credit is extended to 11 (eleven)
sugar mills for ultimate disbursement among their affiliated
farmers.
08)Social

forestation

Program:

This program was introduced in 2004 to increase forestation and

to reduce greenhouse affect. Credit is entended through all
branches over the country. Maximum celing of this program is
Page 12

Taka 5.00 lac.

2.10INDUSTRIAL FINANCE
Credit Schemes :
Long term loan for setting up new industrial units and BMRE of existing units including
working capital finance are extended by Sonali Bank Limited to cottage industries, smallmedium-large scale industries and also to self-employed persons with a view to creating
employment opportunities, deployment of resources, increasing GDP and over-all industrial
development of the country. Currently the following credit schemes are on offer by the
bank:
Some of the main
Credit Schemes

Industrial Financing for Thrust Sectors.

Sonali Bank Industrial Credit Scheme.

Special Investment Scheme for Cottage and Small

Industries.

Financing Large Scale Industries through Banks'

Consortium.

Designated Branches

Financing

Software

Development

and

Data

Processing.
About 100 branches including all the corporate and district
headquarters branches are designated to handle industrial
credit.

Thrust Sectors :
Besides the traditional and oft-trodden sectors, Sonali Bank Limited has also come up with
very low rate of interest to finance the following thrust sectors of the economy as identified
by the Government:
Software development and data processing.

Agro-based industries (excepting cold storage for preservation of potatoes).

Manufacture of artificial flowers.

Frozen foods.

Gift items (preferably export oriented).

100% export oriented finished leather goods.

100% export oriented jute goods.

Jewelry and Diamond cutting and polishing.

Page 13

Oil and Gas.

Sericulture and silk industries.

Stuffed Toys (preferably export oriented).

100% export oriented textile industry (excepting garments manufacturing industries)

Other Viable Industrial Sectors :
Composite textile (woven & knit fabrics).

Textile / Acrylic Spinning.

Sweater Industry .

Garments Accessories & Washing Plant.

Denim Fabrics (export oriented).

Tourism / Hotel and Resort facilities.

Hospital & Clinics.

Other Export linkage industries.

Power Generating Plant.

LPG, CNG Filling & Conversion plant.

Pharmaceutical Ind.

Plastic Ind.

Tannery/Rubber Foot wear.

Interest Rates:
Project/Term Loan : 12.00% to 13.00%

Working Capital : 13.00%

Ready Cash

Features :

Page 14

Sonali Bank Ltd. Ready Cash Card is a Debit Card.

Cardholder can easily pay utility bills like - Water, Telephone, Gas etc.

It is easy to remit funds among the participating branches of the Bank.

Transaction beyond working hours.

It is a riskless Cash Carrying facility.

Cashless purchase can be made form specific merchandise points.

Only computerized Branches of Dhaka City will deal Ready Cash Card.

Branches of other Cities and Towns will introduce Sonali Bank Ltd. Ready Cash Card in
due course.
Ancillary Services

Sonali Bank Limited offers multiple special services with its network of branches throughout the country in
addition to its normal banking operations.

Collection:

Gas bills.

Electricity bills.

Telephone bills.

Water/Sewerage bills.

Municipal holding Tax.

Passport fees, visa fees and Travel tax.

Customs & Excise duties.

Source tax and VAT.

Jakat fund.

Hajj deposit.

Land development tax.

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Payment:

Pension of employees of Government and

other Corporate Bodies.

Bangladesh Bank employees pension.

Army pension.

British pension.

Students' stipend/scholarship.

Govt. & Non-Govt. Teachers' salary.

Food procurement bill on behalf of the

Govt.
Social Services:

Old age allowances.

Widows, divorcees and destitute women allowances.

Freedom Fighters' allowances.

Rehabilitation allowances for acid survival women.

Maternal allowances for poor women.

Page 16

Sale & Encashment/Purchase:

Savings Certificates.

ICB Unit Certificates.

Prize Bonds.

Wage Earner's Development Bonds.

Lottery tickets of different Semi-Govt. and Autonomous Bodies.

Sanchaypatra.

Public Service Commission's application form.

Judicial Service Commission's application form.

Exchange of soiled / torn notes.

Misc. Services:

Bank a/c information of tax payee client according to demand of NBR.

Personal Banking:
Sonali Bank Limited extends all the major personal banking facilities and services to its customers
with its skilled work force and largest network of around 1179 branches covering all the urban and
remote rural areas of Bangladesh.
Sonali Bank Limited provides Local & Foreign Remittance in quickest possible time. Foreign
remittance is available in both T.C. & Taka draft.
1. Transfer of fund from one branch to another by
- Demand Draft
- Mail Transfer
- Telegraphic Transfer
2. Transfer of fund on Standing Instruction Arrangement.

Savings A/C
FDR A/C
Trade Finance

3. Collection of cheques through Clearing House/beyond Clearing House.

4. Issuance of Payment Order / Call Deposit.
5. Locker facilities for safe keeping of valuables.

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Training
Sonali bank Staff College, Dhaka along with four Training Institutes / Center(s) at
Chittagong, Rajshahi, Khulna and Bogra have been conducting training program covering
total Banking activities in order to impart training to all categories of officers and staff of
Sonali Bank. In the year 2003 as many as 8430 officers and staff received training in 383
batches of different courses, workshops and seminars conducted by the aforesaid training
institutions Staff College.

2.11 LIBRARY FACILITIES

With the objectives of enriching knowledge and working efficiency of the officers and
members of the staff of Sonali Bank, the Bank has a central library. Library is situated on the
7 floor of its Head Offices Building. It has now been turned into a modern library by
extending its facilities. It has been enlarged with the latest books on Banking, Foreign
Exchange, Computer, Management, Accounting, Agriculture, Industrial Finance, Economics,
Religion, Literature and on many other disciplines. Moreover, different international journals
covering world economy, political and other aspects are also being available here to attract
and inspire the readers.

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3. METHODOLOGY
I. Sources of data
The study is based on primary and secondary sources of data. Data have been collected from
office records discussions with employees and from different paper circulars and annual
report of Sonali Bank. For the report preparation concepts and techniques are gathered from
bank manuals and relevant books.
ii) Sampling Plan
The research concentrates on credit, credit procedure of project that practice by the bank. Non
probability sampling technique is used here because the non probability samples yield good
estimate of the population characteristics. All samples are selected upon my judgment on
study requirements. Mainly procedure papers and related papers are examined and
interviewed. Performance analysis information bureau report and existing loan procedure
which were made by authority of Sonali Bank, I have covered the performace analysis
information from 2011 to 2014 and also at a glance of Sonali Bank presented with this
duration.
Because of time constraints low cost, convenience and quick, I used judgment sampling. The
judgment depends on the purpose of the study. Thats why I can say it is a purposive
sampling. For this here in taken a sample of 20 employee of Sonali bank and aduit papers and
5 years report
iii) Data collection
Data were collected by a team of trained team members by visiting jatrrabari Branch of
Sonali Bank. The authority of Sonali Bank rechecked these collected data before entering
them into data base system.
iv) Fieldwork
As part of the assignment, I visited Head Office and Corporate Branch Office of Sonali Bank.
Before starting internship, training program was helpful which is issued by Sonali Bank
Staff College.
For data collection phase, team members of the training program of Sonali bank Staff College
carried out back check and spot check/verification to ensure accuracy and reliability of
collected data.
During data entry phase, 100% data were rechecked by cross matching with fact sheets and
hard copies. We have considered 100% accuracy level for numeric data and 95% accuracy for
alphanumeric data for entered data into the system.
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v) Data entry and processing

Professional data analyst and data entry personnel were deployed to assist the team in
developing fact sheets in the inception phase. Selected actual data were collected, compiled
and entered into the system for dummy/ trial running of the system. Corrective measures
initiated from trial running were incorporated and redrafted the fact sheets accordingly. For
this purpose we have utilized most convenient database platform to safeguard entered data
and also to generate different report from the database.

Page 20

Financial Statement Analysis

4.1 Ratio Analysis
Financial ratios are useful indicators of a firm's performance and financial situation. Financial
ratios can be used to analyze trends and to compare the firm's financials to those of other
firms. Ratio analysis is the calculation and comparison of ratios which are derived from the
information in a company's financial statements. Financial ratios are usually expressed as a
percent or as times per period. Ratio analysis is a widely used tool of financial analysis. It is
defined as the systematic use of ratio to interpret the financial statements so that the strength
and weaknesses of a firm as well as its historical performance and current financial condition
can be determined. The term ratio refers to the numerical or quantitative relationship between
two variables. With the help of ratio analysis conclusion can be drawn regarding several
aspects such as financial health, profitability and operational efficiency of the undertaking.
Ratio points out the operating efficiency of the firm i.e. whether the management has utilized
the firms assets correctly, to increase the investors wealth. It ensures a fair return to its
owners and secures optimum utilization of firms assets. Ratio analysis helps in inter-firm
comparison by providing necessary data. An inter firm comparison indicates relative position.
It provides the relevant data for the comparison of the performance of different departments.
If comparison shows a variance, the possible reasons of variations may be identified and if
results are negative, the action may be initiated immediately to bring them in line.
Yet12another dimension of usefulness or ratio analysis, relevant from the View point of
management is that it throws light on the degree efficiency in the various activity ratios
measures this kind of operational efficiency.

a) Liquidity Ratios
b) Leverage Ratios
c) Profitability Ratios
d) Activity Ratios
e) Market Ratios
f) Statements of Cash Flow
4.1.1 Liquidity Ratios
Liquidity ratios measure a firms ability to meet its current obligations.
These include:
Current Ratio:
Current Ratio = Current Assets / Current Liabilities
This ratio indicates the extent to which current liabilities are covered by those assets expected
to be converted to cash in the near future. Current assets normally include cash, marketable
securities, accounts receivables, and inventories. Current liabilities consist of accounts
payable, short-term notes payable, current maturities of long-term debt, accrued taxes, and

Page 21

other accrued expenses. Current assets are important to businesses because they are the assets
that are used to fund day-to-day operations and pay ongoing expenses.

Page 22

Year

2010

2011

2012

2013

2014

Current assets 425831620

525831620

57561110
6

67159759
4

73195469
3

Current
Liabilities

325987416

436987416

48045583
2

56665948
3

63194803
8

Current
Ratio

1.30

0.12

1.20

1.19

1.16

Interpretation
The current ratio for the year 2010,2011,2012, 2013 & 2014 is 1.30,0.12 1.20, 1.19 & 1.16
respectively, compared to standard ratio 2:1 this ratio is lower which shows low short term
liquidity efficiency at the same time holding less than sufficient current assets mean
inefficient use of resources.
Sales to Working Capital:
Sales to Working Capital = Sales / Working Capital
Sales to working capital give an indication of the turnover in working capital per year. A
low working capital indicates an unprofitable use of working capita
Year

2010

2011

2012

2013

2014

Sales

26400656

36584698

43685740

43685740

63305033

Working
capital

85242133

75689122

95155274

10493811
1

10000665
5

0.4 times

0.5 times

0.5
times

0.6 times

Sales
to 0.3 times
Working

Interpretation
This liquidity ratio for the years 2012, 2013 & 2014 is 0.5, 0.5 & 0.6 times respectively,
compared to standard ratio 2:1 this ratio is lower which shows low short term liquidity
efficiency at the same time holding less than sufficient current assets mean inefficient use of
resources
Working Capital:
Working Capital = Current Assets Current Liabilities
A measure of both a company's efficiency and its short-term financial health. Positive
working capital means that the company is able to pay off its short-term liabilities. Negative
working capital means that a company currently is unable to meet its short-term liabilities
with its current assets (cash, accounts receivable and inventory). Also known as "net
Working capital", or the "working capital ratio".

Page 23

Year

2010

2011

2012

2013

2014

Current assets 425831620

525831620

57561110
6

67159759
4

73195469
3

Current
Liabilities

325987416

436987416

48045583
2

56665948
3

63194803
8

Working
capital

99844204

88844204

95155274

1049381
11

1000066
55

Interpretation
It is very clear from the above calculations that the working capital of the bank is gradually
increasing over the years, which shows good short term liquidity efficient.
Leverage Ratios
By using a combination of assets, debt, equity, and interest payments, leverage ratio's aroused
to understand a company's ability to meet it long term financial obligations. Leverage ratios
measure the degree of protection of suppliers of long term funds. The level of leverage
depends on a lot of factors such as availability of collateral, strength of operating cash flow
and tax treatments. Thus, investors should be careful about comparing financial leverage
between companies from different industries. For example companies in the banking industry
naturally operates with a high leverage as collateral their assets are easily collateralized.
These include:
Time Interest Earned:
TIE Ratio = EBIT / Interest Charges
The interest coverage ratio tells us how easily a company is able to pay interest expenses
associated to the debt they currently have. The ratio is designed to understand the amount of
interest due as a function of companys earnings before interest and taxes (EBIT). This ratio
measures the extent to which operating income can decline before the firm is unable to meet
its annual interest cost.
Year

2010

2011

2012

2013

2014

EBIT

25693366

325246815

32044524

34298574

48559935

INTEREST
RATE

12549878

125693333

13204037

19153957

19153957

TIE RATIO

2.04

2.58

2.43

1.79

1.83

Interpretation
We can see from this ratio analysis that, this company has covered their interest expenses2.43
times in 2012, 1.79 times in 2013and 1.8 times in 2014. It means they have performed pretty
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much same in 2013 and 2014, but has taken a different look in 2012. As in 2012they issued a
little high number of long-term loans and does not have good liquidity position, their EBIT
became high thus making TIE a little high as well.
Debt Ratio:
Debt Ratio = Total Debt / Total Assets
The ratio of total debt to total assets, generally called the debt ratio, measures the percentage
of funds provided by the creditors. The proportion of a firm's total assets that are being
financed with borrowed funds. The debt ratio is calculated by dividing total long term and
short-term liabilities by total assets. The higher the ratio, the more leverage the company is
using and the more risk it is assuming. Assets and liabilities are found on a company's
balance sheet.
Year

2010

2011

2012

2013

2014

TOTAL
DEBT

416594698

355600255

53684810
2

62875409
2

68274795
3

TOTAL
ASSESTS

432548636

423656961

59029146
8

69199152
1

757928,8
9

DEBT
RETIO

0.96

0.84

0.91

0.91

0.90

Interpretation
Calculating the debt ratio, we came to see that this company is highly
leveraged one.
Debt to Equity Ratio:
Debt to Equity Ratio = Total debt / Total Equity
The debt to equity ratio is the most popular leverage ratio and it provides detail around the
amount of leverage (liabilities assumed) that a company has in relation to the monies
provided by shareholders. As you can see through the formula below, the lower the number,
the less leverage that a company is using. The debt to equity ratio gives the proportion of
accompany (or person's) assets that are financed by debt versus equity. It is a common
measure of the long-term viability of a company's business and, along with current ratio, a
measure of its liquidity, or its ability to cover its expenses. As a result, debt to equity
calculations often only includes long-term debt rather than a company's total liabilities. High
debt to equity ratio implies that the company has been aggressively financing its activities
through debt and therefore must pay interest on this financing.

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Year

2010

2011

2012

2013

2014

TOTAL
DEBT

5666986323

5662559812

53684810
2

62875409
2

68274795
3

TOLAL
EQUITY

444665898

400326599

45177664

55063125

71280902

14.30

11.88

11.42

9.58

DEBT
TO 12.75
EQUITY
RATIO

Interpretation
We can see from the above calculations that this ratios 1st 2 years well of
the run but continuously decreasing in the last three years.
[I will do rest of the ratio and analysis after carrying out checking]
Thank you
Raffiquzaman

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