Bank Performance

Evaluation

Purpose & Sources

The presentation is limited to the overall of
its financial performance analysis and the
practical progress of its operation.

Annual Report of DBBL.

Various reports and articles related to study.
Some of our course elements as related to this report.
Web based support from the internet.

To evaluate the DBBLs

performance evaluation:
Liquidity Ratio.
Efficiency Ratio.
Profitability Ratio.
Solvency Ratio.
Market based ratio.

Last
5
YEARS

LIQUIDITY RATIOS
Liquidity ratio is a class of financial metrics that is
used to determine a company's ability to pay off its
short-terms debts obligations.
Generally, the higher the value of the ratio, the
larger the margin of safety that the company
possesses to cover short-term debts.
Current ratio
Cash Ratio
Net Working Capital
Quick Ratio

one of the
important
liquidity
indicators

Current ratio
Current Ratio = Current Asset/Current
Liabilities
Current Ratio
0.81

0.82
0.8

0.79

0.78
0.76
0.74

Ratio Amount

0.72

0.73

0.73

2012

2013

0.71

0.7
0.68
0.66

2009

2010

2011
Years

Cash Ratio
Cash ratio = Cash and cash equivalents / Current Liabilities

Cash Ratios
0.16
0.14

0.15

0.15

2012

2013

0.12

0.12
0.1
0.1

0.11

0.08

Ratio Amounts

0.06
0.04
0.02
0

2009

2010

2011
Years

Net Working Capital

Net Working Capital =Total Current Assets Total
Current Liabilities
Net Working Capital
25,000,000,000
22,736,774,271

20,000,000,000

15,467,455,838

15,000,000,000

BDT

11,049,204,981

10,000,000,000
7,996,054,100
9,530,008,756
5,000,000,000
0

2009

2010

2011
Years

2012

2013

Quick Ratio
Quick Ratio=Cash + Government Securities + Receivable / Total Current Liabilities.
Quick Ratio
1.06

1.05

1.04
1.02
1

0.99
0.98

0.98

Ratio Amount

0.96

0.99

0.95

0.94
0.92
0.9

2009

2010

2011
Years

2012

2013

Thoughts
In all the previous mentioned ratios it is visible that from year
2009 the current and quick ratio has fallen and the cash ratio
and net working capital ratio have risen after 2010.
So the bank should focus more on managing its current
assets to perfectly meet their short term obligations.

EFFICIENCY RATIOS
Efficiency ratios often look at the time it takes companies to collect
cash from customer or the time it takes companies to convert
inventory into cash SALES.
These ratios are used by management to help improve the
company as well as outside investors and creditors looking at how
efficiently the business operation is being done.
Cash Turnover
Net Working Capital Turnover

one of the
Fixed Asset Turnover
important
Days' Sales in Receivables
efficiency
Accounts Receivable Turnover
indicators
Accounts Receivable Turnover in Days
Total Asset Turnover

Cash Turnover
Cash Turnover = Net sales/ Cash

Cash Turnover

Times

0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0

0.47
0.31

2009

0.37

2010

0.37

0.34

2011
Years

2012

2013

Net Working Capital Turnover

Net Working Capital Turnover =Net Sales /Average
Working Capital
Net Working Capital Turnover
0.5

0.45

0.45
0.4

0.45

0.39

0.35

0.32

0.3

Times

0.25

0.26

0.2
0.15
0.1
0.05
0

2009

2010

2011
Years

2012

2013

Total Asset Turnover

Total Asset Turnover =Net Sales /Average Total
Assets
Total Asset Turnover
0.05
0.05

0.04

0.04

0.04
0.04

0.04

0.04
0.03

Times

0.03

0.03

0.02
0.02
0.01
0.01
0

2009

2010

2011
Years

2012

2013

Fixed Asset Turnover

Net Sales / Net Fixed Assets

Fixed Asset Turnover

1.8
1.6

1.67

1.4
1.2
1.17
1

Times

1.5
1.27

1.25

2010

2011

0.8
0.6
0.4
0.2
0

2009

Years

2012

2013

Days' Sales in Receivables

Day's Sales In Receivables

0.07
0.06
0.06
0.05

0.05
0.04
0.04

0.04

Times

0.04

0.03
0.02
0.01
0

2009

2010

2011
Years

2012

2013

Accounts Receivable Turnover

Net Sales /Average Gross Receivables
Account Receivable Turnover
0.45
0.4
0.35

0.31

0.3
0.25

Times

0.2

0.21

0.38

0.34

0.28

0.15
0.1
0.05
0

2009

2010

2011
Years

2012

2013

Accounts Receivable Turnover in Days

Net Sales /Average Gross Receivables
Account Receivable Turnover

0.45
0.4
0.38

0.35

0.31

0.3
0.25

Times

0.2

0.34

0.21

0.28

0.15
0.1
0.05
0

2009

2010

2011
Years

2012

2013

Thoughts
In all the above mentioned ratios it is visible that from year 2009 the
cash turnover, net working capital turnover, total asset turnover, accounts
receivable turnover ratio has increased again fell down from 2012.
Only fixed asset turnover ratio maintained a constant growth over the
past 5 years. So the bank should focus more on managing its cash, net
working capital, and total assets and accounts receivables against their
sales to become more efficient.

PROFITABILITY RATIOS
The profitability ratios can also be defined as the
financial measurement that evaluates the capacity of
a business to produce yield against the expenses and
costs of business over a particular time period.
The higher or same profitability ratio of a company
compared to its previous period also indicates that
the company is doing well. The return on assets,
profit margin and return on equity are the examples
of profitability ratios.

one of the important

profitability
indicators (not all are
presented)

Gross profit margin

Gross Profit Margin= (Total Sales-Cost of
Goods Sold)/Sales
Gross Profit Ratio
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
Percentage

39.60%
33.90%
30.20%
28.60%
22.90%

15.00%
10.00%
5.00%
0.00%

2008

2010

2012
Years

2014

net profit margin

Net Profit Margin=(Net Profit After Tax/Net
Sales)*100
Net Profit Margin

20%

19%

18%
16%
14%

15%

15%
13%

12%

10%

10%
Percentage
8%
6%
4%
2%
0%

2008

2010

2012
Years

2014

return on assets
Return on assets (ROA) = Net Income/Total Asset

Return on Asset
2.50%

1.98%

2.00%
1.50%

1.75%

1.39%

1.48%
1.08%

Percentage
1.00%
0.50%
0.00%

2008

2010

2012
Years

2014

Equity multiplier
Equity Multiplier =Total Asset/Total Equity
Equity Multiplier
20.00
18.00
16.00

18.79
14.45

14.00
13.79

12.00

Times

14.36

14.68

10.00
8.00
6.00
4.00
2.00
0.00

2008

2010

2012
Years

2014

Return on Equity
Return on equity (ROE) = Return on
Asset*Equity Multiplier
Return on Equity
35.00%
30.00%
25.00%
20.00%

28.60%
26.14%
24.10%
21.32%
15.83%

Percentage15.00%
10.00%
5.00%
0.00%

2008

2010

2012
Years

2014

Return on Retained Earnings

Return on Retained Earnings=Retained Earnings/Net Income
Return on Retained earnings
80.00%

74.63%
64.78%
55.86%
47.50%

70.00%
60.00%
50.00%

Percentage

40.00%
30.00%
20.00%
10.00%
0.00%

2008

0.95%

2010
Years

2012

2014

Thoughts
From the analysis, it is noted that there is a constant
decrease in the net profit margin ratio which shows that
the bank is earning a bit less profits, in the last two years
compared to the first three years.
The bank should make efforts to keep up the same pace of
earning retention ratio to continue its further business
growth and development.

SOLVENCY RATIO
Solvency ratio is a key metric used to measure an enterprises
ability to meet its debt and other obligations.
The solvency ratio indicates whether a companys cash flow is
sufficient to meet its short-term and long-term liabilities.
The lower a company's solvency ratio, the greater the
probability that it will default on its debt obligations.

one of the important

solvency indicators
(not all are
presented)

Solvency Ratio
Solvency Ratio = Net Income + Depreciation/Short
term Liabilities + Long Term Liabilities
Solvency Ratio
4.00%

3.38%

3.00%
2.50%

Percentage

2.00%

3.40%

3.40%

3.50%

2.20%

2.65%

1.50%
1.00%
0.50%
0.00%

2008

2010
Years

2012

2014

Debt to Equity Ratio

Debt to Equity Ratio = Total
liability / Stockholder's Equity
Debt to Equity Ratio
40.00
35.00

34.80

30.00
23.60

25.00
Times

20.20

20.00

15.10

15.00
10.00

11.00

5.00
0.00

2008

2009

2010
Years

2011

2012

2013

2014

Capital Adequacy
Year

2009

2010

2011

2012

2013

Tier 1 Capital (total equity -

8%

6.4%

8%

9.2%

9.5%

4.2%

2.8%

3.2%

2.8%

4.2%

revaluation reserve)

Tier 2 Capital (rev.

reserves+sub debt+hybrid
cap+prov incl. def tax+total
loan loss+other resrvs.)

Total risk weighted asset (BDT) 1127707 1025188

Capital Adequacy Ratio

0
11.6%

00
9.6%

938383 1025188 112770

0
11.2%

0
12%

7
13.7%

Capital adequacy ratio = Tier I Capital + Tier II Capital /

Risk Weighted Assets
Capital Adequacy Ratio
16.00%
13.70%

14.00%
12.00%

11.60%

12.00%

9.60%

10.00%

Percentage

11.20%

8.00%
6.00%
4.00%
2.00%
0.00%

2008

2009

2010

2011

Years

2012

2013

2014

Gearing ratio
Gearing ratio= LTD + STD +Bank Overdraft
/shareholders' equity
Gearing Ratio
45.26%

45.50%
45.00%

44.64%

44.59%

44.50%

44.14%

44.00%
43.50%
43.00%
Percentage

42.50%

42.20%

42.00%
41.50%
41.00%
40.50%

2008

2010

2012
Years

2014

Ratio of Nonperforming Loan to Total

Loan
NPLTTL= non performing loan/total loan amount

Ratio of Non Performimg Loan to Total Loan

4.50%
4.00%

3.90%

3.50%
3.00%

3.00%

2.50%

2.50%

2.70%
2.40%

Percentage
2.00%
1.50%
1.00%
0.50%
0.00%

2008

2009

2010

2011
Years

2012

2013

2014

MARKET BASED RATIOS

It evaluates the current market price of a share of
common stock versus an indicator of the
company's ability to generate profits or assets
held by the company.
Were going to be examining market ratios of
DBBL, which are indicators to an analyst and
investors
to understand.
That
discussion
will include a brief

overview of each ratio, including

price to earnings, dividend yield and
few others.

one of the important

market indicators (not all
are presented)

Price Earnings Ratio= Stock's Share Price/EPS

Price Earning Ratio

40.00
35.00

34.95

30.00
25.00
Times

22.93

20.00

14.94

15.00
10.00

9.85

10.47

5.00
0.00

2008

2009

2010

2011
Years

2012

2013

2014

Earnings Per Share= Net Income /

Outstanding Shares
Earning Per Share
BDT 14.00
BDT 11.60

BDT 12.00

BDT 10.00

BDT 10.00
BDT 8.00
BDT 6.00
BDT Amount

BDT 10.00

BDT 10.80

BDT 5.60

BDT 4.00
BDT 2.00
BDT -

2008

2010
Years

2012

2014

Dividend Yield= DPS / Stock's Price Per Share

Dividend Yield
4.50%
4.00%

3.82%

3.50%
3.50%

3.00%

2.48%

2.50%
2.00%
Percentage
1.50%

1.31%

1.00%
0.50%
0.00%

0.00%

2008 2009 2010 2011 2012 2013 2014

Year

Net Asset Value per Share= Net Assets /

No. of Shares
Net Asset Value per Share
BDT 70.00
BDT 63.20

BDT 60.00
BDT 54.30

BDT 50.00
BDT 44.70
BDT 40.00
BDT 35.00
BDT 30.00
BDT 20.00

BDT 21.70

BDT 10.00
BDT -

2008

2010

2012
Years

2014

Market Capitalization=No. of outstanding Share*Per

Share Price
Market Capitalization

BDT 50,000,000,000

BDT 45,855,000,000

BDT 45,000,000,000
BDT 40,000,000,000
BDT 35,000,000,000
BDT 30,000,000,000

BDT 29,366,000,000

BDT 32,260,000,000
BDT 22,850,000,000

BDT 25,000,000,000
BDT 20,000,000,000

BDT 20,940,000,000

BDT 15,000,000,000
BDT 10,000,000,000
BDT 5,000,000,000
BDT -

2008

2010
Year

2012

2014

Thoughts
From the analysis, it is noted that there is a
fluctuation in the market based ratios of
DBBL. In all the above mentioned ratios it
is visible that from year 2009 the DPS,
dividend yield, dividend payout ratio has
increased at a constant growth till 2013.
Their increasing EPS and DPS is a positive sign to the
bank as more investors are now interested in investing
thus increasing the market capitalization.

Overall Performance

Their profitability ratio indicates that DBBLs profit is not up to

the mark against their operational expenses.
Efficiency ratios of DBBL is not efficient enough as they are
not generating proper revenues from their cash, accounts
receivables and assets
Under liquidity ratios we have found that DBBL is currently
facing some difficulties to manage their short term obligations
with their current assets.
Solvency ratios we have found out that DBBLs solvency status
is pretty positive.
Market based ratios are promising for DBBL which indicates
that they are able to capitalize in the market as the investors
are interested to invest in their share.

THANKS