23 EARNING ASSETS TO TOTAL ASSETS RATIO Earning assets to total assets ratio

23 earning assets to total assets ratio earning

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2.3EARNING ASSETS TO TOTAL ASSETS RATIOEarning assets to total assets ratio tells us about the bank managementefficiency to utilize the earning assets.FORMULA:Earning assets to total assets ratio=Earning assets/ TotalassetsParticularsYears 2012Years 2013Year2014Formula:827286516/946253269918673469 /10380184671022840481/1153480100Ratio0.87.880.89INTERPRETATIONThe earning assets to total assets ratio increases which means efficiencyof bank improves. It means earning capacity of earning assets .89 against1 rupee.3.PROFITABILITY ANALYSISProfitability analysis of a firm indicates the overall efficiently of themanagement. Without profit a company cannot attract the outside capital.Profitability analysis includes:3.1RETURN ON TOTAL ASSETSThe return on assets ratio provides a standard for evaluating howefficiently financial management employs the average dollar invested inthe firm's assets, whether the dollar came from investors or creditors.FORMULAReturn on total assets ratio= Net Profit after Tax/ Total Assets*100
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87INTERSHIPREPORT on NBP BY shaheryar ParticularsYears 2012Years 2013Year2014Formula17449042/94625326917738405/10381846717709165/1153480100Ratio1.80%1.70%1.53%INTERPRETATIONIt shows the decrease trend of profitability. It means the assets of businessare fully utilized in 2012 and ratio is 1.80 but the assets of the businessare fully not utilized in more and efficient way in 2014 and ratio is 1.53and also shows the unfavorable trend of the business.3.2RETURN ON INVESTMENTA performance measure used to evaluate the efficiency of an investmentor to compare the efficiency of a number of different investmentsFORMULAReturn on investment= Net Profit after Tax/ Investment*100ParticularsYears 2012Years 2013Year2014Formula17449042 /21759603717738405/30107849817709165/319527254Ratio8.01%5.89%5.50%INTERPRETATIONIt means the investment of the business are fully utilized in more andefficient way it also shows that NBP have large amount of investment butit needs some improvement and also shows the unfavorable trend of thebusiness
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88INTERSHIPREPORT on NBP BY shaheryar 3.3RETURN ON EQUITYReturn on equity measures a corporation's profitability by revealing howmuch profit a company generates with the money shareholders haveinvested.Formula:Net Profit after Tax/ Total Equity*100ParticularsYears 2012Years 2013Year2014Formula17449042 /12068162217738405/13080075617709165/135298921Ratio14.45%13.56%13.08%INTERPRETATIONThis ratio is more meaningful for share holders who are interested to knowthe profit earned by the company because the dividend paid fromavailable profit higher ratio means factor of production fully utilized andgood position but here there is decline in ratio.3.4Average Profit Per Branch. It shows ration ship between ne profits andbranchesParticularsYears 2012Years 2013Year2014Formula17449042 /118917738405/124517709165/1283Ratio146751424713802INTERPRETATION.The average profit per branch is decreasing due to increases in no. ofbranches of NBP It is not healthy for bank.
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  • Fall '17
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  • NBP, Banks of Pakistan, INTERSHIP REPORT, NBP BY shaheryar

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