UNITED BANK LIMITED (UBL)

COMPLETE RATIO ANALYSIS

FOR INTERNSHIP REPORT
YEAR 2008, 2009, 2010
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FINANCIAL RATIO ANALYSIS
The user of financial statements finds it helpful to calculate ratios when they interpret companys financial
statements. A financial ratio is simply one quantity divided by another. Ratios focus on special
relationship between two items of balance sheet, income statement or one from each. Ratios make it
easier to understand a specific relationship between various items of financial statements then looking
simply at the raw numbers themselves. The number of financial ratios that might be created is virtually
limitless, but there are certain basic ratios that are frequently used, these ratios can be placed into six
different classes.
Net Profit Margin
Gross Spread Ratio
Non Interest Income to Total Income Ratio
Spread Ratio
Return on Assets (ROA)
Du Pont Return on Assets Ratio
Return on Total Equity (ROE)
Debt Ratio
Debt / Equity Ratio
Times Interest Earned Ratio
Advances / Deposits Ratio
Operating Cash Flow Ratio
Dividend per Share
Earning per Share
Price/Earning Ratio

The calculation and interpretation of these ratios of financial statements of UBL are as follows.

Net profit
Formula: Net Profit/Revenue*100
The values are given in financial statement on UBL banks website.
2010 = 26103808/59331761*100=44%
2009=20077874/60857035*
2008=19760154/51919229*100=38%

Graphical Presentation




Interpretation
0
10
20
30
40
50
2010 2009
Times Interest Earned Ratio
Advances / Deposits Ratio
Operating Cash Flow Ratio
lation and interpretation of these ratios of financial statements of UBL are as follows.
Net Profit/Revenue*100
The values are given in financial statement on UBL banks website.
2010 = 26103808/59331761*100=44%
2009=20077874/60857035*100=33%
2008=19760154/51919229*100=38%
2009 2008
Net Profit
lation and interpretation of these ratios of financial statements of UBL are as follows.


Net Profit
Net profit Ratio increase in 2008 but decrease in 2009 this is not
the net profit is increase.

Gross Spread Ratio
Formula: Net margin Income/Gross Margin
2010=11159930/2613808=0.42
2009=26049777/20077875=1.29
2008=24239841/19760154=1.21

Graphical Presentation
Interpretation
Gross spread refers to the fees that underwriters receive for arranging
offering of debt or equity securities. in 2009 it is increase but in 2010 it is decrease.
Increase in gross spread is favorable for bank.


Non Interest Income to Total Income Ratio
Formula: Non Interest Income/Total Income
0
5
10
15
2010 2009
Net profit Ratio increase in 2008 but decrease in 2009 this is not

Net margin Income/Gross Margin
2010=11159930/2613808=0.42
2009=26049777/20077875=1.29
2008=24239841/19760154=1.21
Gross spread refers to the fees that underwriters receive for arranging
offering of debt or equity securities. in 2009 it is increase but in 2010 it is decrease.
Increase in gross spread is favorable for bank.
Non Interest Income to Total Income Ratio
Non Interest Income/Total Income
2009 2008
Gross spread Ratio 0.421.29
Net profit Ratio increase in 2008 but decrease in 2009 this is not favorable. In 2010

Gross spread refers to the fees that underwriters receive for arranging and underwriting an
offering of debt or equity securities. in 2009 it is increase but in 2010 it is decrease.
Gross spread Ratio 0.421.29
*Information Not Available

Spread Ratio
Formula: Borrowing-Lending
2010=45104849-12384778=32720071
2009=35144823-23162136=11982687
2008=44195886-22805341=21390545
Graphical Presentation
Interpretation
Spread ratio is favorable if the pr
and 2009 the ratio is decrease but in 2010 ratio is increase which suitable for the
firm.
Time Interest Earned
(Profit before taxation+ Total non
interest expenses
The values are given in financial statement on UBL banks website.
2010=6582288+18482222/18482222=1.3561
2009=4841814+17712934/17712934=1.2733
0
10000000
20000000
30000000
40000000
2010

Lending
12384778=32720071
23162136=11982687
22805341=21390545
Spread ratio is favorable if the price change over the life of underlying asset. In 2008
and 2009 the ratio is decrease but in 2010 ratio is increase which suitable for the
(Profit before taxation+ Total nonmarkup interest expenses) / Total non
The values are given in financial statement on UBL banks website.
2010=6582288+18482222/18482222=1.3561
2009=4841814+17712934/17712934=1.2733
2009 2008

ice change over the life of underlying asset. In 2008
and 2009 the ratio is decrease but in 2010 ratio is increase which suitable for the
up interest expenses) / Total nonmarkup

Spread Ratio
2008=5541304+16565344/16565344=1.3345
Graphical Presentation




Interpretation
The times interest earned ratio
to meet interest payments. Ratio is slightly decreasing FIRSTLY BUT THAN
INCREASE in 2010this is favorable for bank.


Debt Ratio

Formula: Total Liabilities/ Total Asset
The values are given in financial statement on UBL banks website.

2009=573131166/640449529=0.8948888
2008=571311725/620707389=0.9024
2010=630359914/698784979=0.9020
Graphical Presentation
1.2
1.25
1.3
1.35
1.4
2010
2008=5541304+16565344/16565344=1.3345
ed ratio indicates the extent of which earnings are available
to meet interest payments. Ratio is slightly decreasing FIRSTLY BUT THAN
INCREASE in 2010this is favorable for bank.
Total Liabilities/ Total Asset
n financial statement on UBL banks website.
2009=573131166/640449529=0.8948888
2008=571311725/620707389=0.9024
2010=630359914/698784979=0.9020
2009 2008
Time Interest Earned
indicates the extent of which earnings are available
to meet interest payments. Ratio is slightly decreasing FIRSTLY BUT THAN

Time Interest Earned



Interpretation


This ratio indicates that the value
be decrease for good health of the bank.

Debt / Equity Ratio
Formula: Total Liabilities/ Share Holder Equity

The values are given in financial statement on UBL banks website.

2010=630359914/60180924=10.4744
2009=57313166/52276246=1.0963
2008=571311725/47121165=12.1243

Graphical Presentation
0.88
0.885
0.89
0.895
0.9
0.905
2010 2009
This ratio indicates that the value is decreasing, which is favorable for the bank. Ratio must
be decrease for good health of the bank.

Total Liabilities/ Share Holder Equity
The values are given in financial statement on UBL banks website.
180924=10.4744
2009=57313166/52276246=1.0963
2008=571311725/47121165=12.1243
2009 2008
e!it Ratio

is decreasing, which is favorable for the bank. Ratio must

e!it Ratio
Interpretation
This ratio indicates that the value is decreasing continuously, which is favorable for the
bank. Ratio must be decrease for good health of the bank.
Return on Assets
Formula: Return on Assets (ROA) = (Net Profit / Total Assets) x 100
The values are given in financial statement on UBL banks website.


2010=11159930/68415065*100=16.31%
2009=9192687/60936723*100=15
2008=8333120/43862759*100=18.99%

Graphical Presentation
Interpretation
0
5
10
15
0
5
10
15
20
2010 2009
This ratio indicates that the value is decreasing continuously, which is favorable for the
decrease for good health of the bank.

Return on Assets (ROA) = (Net Profit / Total Assets) x 100
The values are given in financial statement on UBL banks website.
2010=11159930/68415065*100=16.31%
2009=9192687/60936723*100=15.08%
2008=8333120/43862759*100=18.99%
2010 2009 2008
2009 2008
Ret"rn on #sset

This ratio indicates that the value is decreasing continuously, which is favorable for the
Return on Assets (ROA) = (Net Profit / Total Assets) x 100


e!t $ E%"it& Ratio
Ret"rn on #sset
The return on assets decreases first in 2009, than it again high which is favorable for the
bank. The higher the ROA number, the better, because the c
money on less investment.
DuPont Return on Assets
= Net Profit / Sales) x (Sales / Total Assets) x 100
= (Net Income / Share equity) x 100
The values are given in financial statement on UBL banks website.
2010=11159930/60180924*100=
2009=9192687/52276246*100=17.58%
2008=8333120/4712165*100=176.842%
Graphical Presentation

Interpretation
A combination of financial ratios is a series to evaluate investment return. The benefit of the
method is that it provides an understanding of how the company generates its return. In
2010 decrease show that return on investment decrease.

Return on Total Equity
Formula: Net profit / Equity
The values are given in financial statement on UBL banks website.
0
10
20
30
40
200'
The return on assets decreases first in 2009, than it again high which is favorable for the
bank. The higher the ROA number, the better, because the company is earning more

DuPont Return on Assets
= Net Profit / Sales) x (Sales / Total Assets) x 100
Net Income / Share equity) x 100
The values are given in financial statement on UBL banks website.
2010=11159930/60180924*100=18.54%
2009=9192687/52276246*100=17.58%
2008=8333120/4712165*100=176.842%
A combination of financial ratios is a series to evaluate investment return. The benefit of the
provides an understanding of how the company generates its return. In
2010 decrease show that return on investment decrease.
Net profit / Equity
The values are given in financial statement on UBL banks website.
2008 2009
"Pont Ret"rn on #ssets
The return on assets decreases first in 2009, than it again high which is favorable for the
ompany is earning more


A combination of financial ratios is a series to evaluate investment return. The benefit of the
provides an understanding of how the company generates its return. In

"Pont Ret"rn on #ssets

2010=11159930/60180924*100=18.54%
2009=9192687/52276246*100=17.58%
2008=8333120/47121165*100=17.68%

Graphical Presentation
Interpretation
Return on equity decreases in 2008 and in 2009, which means it is unfavorable for the
bank. But than in 2010 it is increase so it is favorable for the bank. The value of the ratio
needs to be increase for healthy organizations.
Operating Cash Flow Ratio
Formula: Cash Flows from Operation/Current liabilities
2010=100070346/630369914*100=15.87%
2009=22790064/558807328*100=40.&%
2008=388192/561676581*100=6.9%
Graphical Presentation
1'
1'.5
18
18.5
19
2010 2009
9930/60180924*100=18.54%
2009=9192687/52276246*100=17.58%
2008=8333120/47121165*100=17.68%
Return on equity decreases in 2008 and in 2009, which means it is unfavorable for the
han in 2010 it is increase so it is favorable for the bank. The value of the ratio
needs to be increase for healthy organizations.
Operating Cash Flow Ratio
Formula: Cash Flows from Operation/Current liabilities
2010=100070346/630369914*100=15.87%
90064/558807328*100=40.&%
2008=388192/561676581*100=6.9%
2009 2008
Ret"rn on Tota( E%"it&

Return on equity decreases in 2008 and in 2009, which means it is unfavorable for the
han in 2010 it is increase so it is favorable for the bank. The value of the ratio
Ret"rn on Tota( E%"it&

Interpretation
Operating cash flow is cash required to meet the operating activities. In 2010 it is
decrease which is unfavorable for the firm.
Advances/Deposits Ratio
Formula: Loan/Deposits
2010=333723172/550645767*100=60.61%
2009=45694713/492036103*100=92.8%
2008=371139675/483560062*100=76.75%
Graphical Presentation
Interpretation
A healthy bank has lots of secure
depositor's accounts. in 2010 it is decrease which is unfavorable for the bank.
Dividend Per Share
0
10
20
30
40
50
2010 2009
0
20
40
)0
80
100
2010 2009
Operating cash flow is cash required to meet the operating activities. In 2010 it is
decrease which is unfavorable for the firm.
Advances/Deposits Ratio

2010=333723172/550645767*100=60.61%
2009=45694713/492036103*100=92.8%
2008=371139675/483560062*100=76.75%
healthy bank has lots of secure loans generating lots of income (interest) to cover
accounts. in 2010 it is decrease which is unfavorable for the bank.
2008
*peratin+ ,as- f(o. 15.8'
2009 2008
#d/an0e eposit Ratio )0.)1
92.8

Operating cash flow is cash required to meet the operating activities. In 2010 it is

loans generating lots of income (interest) to cover
accounts. in 2010 it is decrease which is unfavorable for the bank.
*peratin+ ,as- f(o. 15.8'
#d/an0e eposit Ratio )0.)1
Formula: Dividend/Shares
2010=4006407/5180000=77p
2009=4006407/12241798=32.7p
2008=1011719/11128907=9p
Graphical Presentation

Interpretation
If dividend per share ratio is increase than number of shareholder are increase .in 2009 it is
increase which is favorable but in 2010 it is decrease which is unfavorable.
Earning Per Share

Formula: Profit After Tax / Total Number of Shares
2010=11159930/51800000=0.125
2009=11159930/112890= 10 Rs.
2008=9192687/1011719=9 Rs.
Graphical Presentation
0
5
10
15
20
25
30
35
2010 2009
Formula: Dividend/Shares
2010=4006407/5180000=77p
2009=4006407/12241798=32.7p
2008=1011719/11128907=9p
If dividend per share ratio is increase than number of shareholder are increase .in 2009 it is
increase which is favorable but in 2010 it is decrease which is unfavorable.
Formula: Profit After Tax / Total Number of Shares
2010=11159930/51800000=0.125
2009=11159930/112890= 10 Rs.
2008=9192687/1011719=9 Rs.
2008
i/idend Per S-are ''

If dividend per share ratio is increase than number of shareholder are increase .in 2009 it is
increase which is favorable but in 2010 it is decrease which is unfavorable.
i/idend Per S-are ''

Interpretation
Earning ratio indicate the profit of bank .so
bank in 2009 it is increase but in 2010 it is decrease.
Price/Earning Ratio
Formula: Market Value per Share / Earning Per Share
2010=10/0.215=46.5
2009=10/10=1
2008=10/9=1.11
Graphical Presentation

Interpretation
A lower price earning ratio always better
2010 it is sharply high which is not good for the bank.
CURRENT RATIO:
UBLs current ratio is increasing over the time.
to meet the short-term obligations as they come due. The UBLs current ratio is
0
2
4
)
8
10
2010 2009
0
2
4
)
8
2010 2009
Earning ratio indicate the profit of bank .so if this ratio is increase than it is favorable for the
bank in 2009 it is increase but in 2010 it is decrease.
Formula: Market Value per Share / Earning Per Share
A lower price earning ratio always better for the bank. In 2008 and 2009 it is lower but in
2010 it is sharply high which is not good for the bank.
UBLs current ratio is increasing over the time. Higher the current ratio higher the ability
term obligations as they come due. The UBLs current ratio is
2008
Earnin+ per S-are 0.125
2008
Pri0e Earnin+ Ratio 4).5

if this ratio is increase than it is favorable for the

for the bank. In 2008 and 2009 it is lower but in
Higher the current ratio higher the ability
term obligations as they come due. The UBLs current ratio is
Earnin+ per S-are 0.125
Pri0e Earnin+ Ratio 4).5
increased by 0.18% as compared to 2008. this in turn decreases the risk of insolvency.
The change is occurring due to increase in short term investment and decrease in short
term borrowings.

ASSETS TURNOVER:
This shows revenue generated per rupee investment in total assets. UBLs assets
turnover ratio has shown a little decrease. This is because of increase in total assets
with proportionate increase in revenue. Banks have relatively low ATR capital, as they
are selective in advancing loans and generating smaller sales.

DEBT TO ASSET RATIO:
The analysis of total debt to assets ratio, there has been decrease of one percent as
compared to 2008 and 6% to 2007. In 2007 every rupee one of assets was being
financed by rupees 0.098 or debt and in 2008 it is 0.94 while in 2009 it is reduced to
0.93 worth of debt per rupee of asset. Although the decrease is not large enough but it
is a good sign for banks creditors. The decrease may be attributed to the substantial
decrease in borrowings from financial institutions but the affect was weakened by an
increase in bills payable and other liabilities.

DEBT TO EQUITY:
This ratio measures how the company is leveraging its debt against the capital
employed by its shareholders. Analysis of debt to equity ratio indicates that the current
position for the debt to equity is that for every one rupee in equity provided by the
shareholders the bank has Rs. 13.5 as a debt. This shows that the bank is heavily
relying on debt financing. The reason for huge difference stated in the table is because
of losses occurred in 2007 and 2008.

COVERAGE RATIO:
This ratio shows the number of times a company can cover or meet its financial charges
or obligations. One of the most commonly used ratios is the interest coverage ratio that
measures the number of times the income is available to pay interest charges. The UBL
interest coverage ratio has shown significant improvement in these three years. The
ratio is increased from 0.10 to 3.34.

GROSS PROFIT MARGIN:
Gross profit margin is the difference between the revenue and cost of goods sold. Gross
profit is critical because it represents the amount of money remaining to pay operating
expanses financing cost and taxes. UBLs gross profit margin per rupee has shown
rising trend in last three years. There is an increase of 27% in 2009 as compared to
2008. this shows efficiency of the bank to control the cost of sales.

NET PROFIT MARGIN:
This ratio shows the profit that is available from each rupee of the sale. After all
expanses have been paid. Net profit margin is also showing an increasing trend. UBL
has improved net profit margin in the current years. The net profit margin has reached
to 30% as compared to 2008 in which it was only 12.69%. While in 2007 it was in
negative figure. It shows a good impact on the UBLs Balance Sheet.

RETURN ON INVESTMENT:
This ratio measures the profitability per rupee of investment in assets. UBLs return on
investment has shown an improvement more than 100%. In 2009 the ratio is 1.24%
while in 2008 it was 0.76% and in 2007 it was in ive figures. Although the assets have
increased but the operational recovery of the bank is main cause of increasing this ratio.

RETURN ON EQUITY:
This ratio shows the profit as a proportion of the book value of the common
shareholders. The return on equity is also shown a great deal of positive change. In
2009 the ratio is 45% while in 2008 it was only 16% and in 2007it was in negative
figures.

ADVANCES TO DEPOSIT RATIO:
This ratio shows the companies advances employed per unit of deposit. This ratio of
UBL over the recent three years shows a decreasing trend. In 2007 it was 56% while in
2008 it was 46% and in 2009 it is 45%.

INVESTS TO DEPOSIT:
This ratio shows the companys investment employed per unit of deposit. This ratio
increased in 2008 as compared to 2007 but in 2009 it again decreased. It is because of
industrial development factors in the country by which lending has been increased and
investment is slightly decreased.