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Fim Report On Askari Bank

The document defines and provides formulas for calculating several financial ratios: Return on equity (ROE) measures a company's net income generated from shareholders' equity. It is calculated as net income divided by shareholders' equity. Return on assets (ROA) measures how efficiently a company uses its assets to generate earnings. It is calculated as annual earnings divided by total assets. Equity multiplier measures financial leverage by dividing total assets by shareholders' equity. Profit margin measures net profits divided by sales to indicate how much of each dollar of sales is retained as earnings after costs. It is expressed as a percentage.

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54 views2 pages

Fim Report On Askari Bank

The document defines and provides formulas for calculating several financial ratios: Return on equity (ROE) measures a company's net income generated from shareholders' equity. It is calculated as net income divided by shareholders' equity. Return on assets (ROA) measures how efficiently a company uses its assets to generate earnings. It is calculated as annual earnings divided by total assets. Equity multiplier measures financial leverage by dividing total assets by shareholders' equity. Profit margin measures net profits divided by sales to indicate how much of each dollar of sales is retained as earnings after costs. It is expressed as a percentage.

Uploaded by

sagheer abbas awan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Return On Equity - ROE

The amount of net income returned as a percentage of shareholders equity. Return on equity measures
a corporation's profitability by revealing how much profit a company generates with the money
shareholders have invested.

ROE is expressed as a percentage and calculated as:

Return on Equity = Net Income/Shareholder's Equity

Return on Assets - ROA


An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how
efficient management is at using its assets to generate earnings. Calculated by dividing a company's
annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as
"return on investment".

The formula for return on assets is:

Equity Multiplier
A measure of financial leverage. Calculated as:

Total Assets / Total Stockholders' Equity

Like all debt management ratios, the equity multiplier is a way of examining how a company uses debt to
finance its assets. Also known as the financial leverage ratio or leverage ratio.

Profit Margin
A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It
measures how much out of every dollar of sales a company actually keeps in earnings.

Profit margin is very useful when comparing companies in similar industries. A higher profit margin
indicates a more profitable company that has better control over its costs compared to its competitors.
Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a
net income of $0.20 for each dollar of sales.

1) Interest expense ratio = interest expense/ Total operating income


2) Provision for loan Ratio = Provision for loan losses/ Total operating income
3) Non- interest expense Ratio = Non-interest expense/ Total operating income
4) Tax Ratio = Income tax/ Total operating income

Asset Utilization:
It measures the extend to which bank assets generate revenue. The breakdown of asset utilization ratio
sepeartes the total revenue generated into interest income and non interest income.

Total operating income / Total asset

1) Interest incime Ratio = interest income/ Total asset


2) Non- interest income ratio= non- interest income/ Total income

No. Of Years 2005 2006 2007 2008 2009

ROE= Net 0.403975 0.349902 0.365317 0.195122 0.094773


income/ Total
equity

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