Ratio analysis of provati insurance co. ltd

2011

Liquidity ratio

1. Current Ratio -- The current ratio is the most commonly used measure of the liquidity of a company. It is simply a common sense measure. The numerator is the value of assets that should be converted into cash within the next year. The denominator is the amount of bills coming due within the next year.

Here current ratio is 2.33 that is greater than 2. That means too much current assets which

will go down profitiblity but liquidity will increase.

2010

Liquidity ratio

1. Current Ratio -- The current ratio is the most commonly used measure of the liquidity of a company. It is simply a common sense measure. The numerator is the value of assets that should be converted into cash within the next year. The denominator is the amount of bills coming due within the next year.

Here current ratio is 2.20 at is greater than 2. That means too much current assets which

will go down profitiblity but liquidity will increase.

2009

Liquidity ratio

1. Current Ratio -- The current ratio is the most commonly used measure of the liquidity of a company. It is simply a common sense measure. The numerator is the value of assets that should be converted into cash within the next year. The denominator is the amount of bills coming due within the next year.

Here current ratio is 1.2 that is less than 2. That indicates liquidity problem.

2008

Liquidity ratio

1. Current Ratio -- The current ratio is the most commonly used measure of the liquidity of a company. It is simply a common sense measure. The numerator is the value of assets that should be converted into cash within the next year. The denominator is the amount of bills coming due within the next year.

Here current ratio is 1.1that is less than 2. That indicates liquidity problem.

2007

Liquidity ratio

1. Current Ratio -- The current ratio is the most commonly used measure of the liquidity of a company. It is simply a common sense measure. The numerator is the value of assets that should be converted into cash within the next year. The denominator is the amount of bills coming due within the next year.

Here current ratio is 1.45 that is less than 2. That indicates liquidity problem.

Underwriting ratio

2. Loss Ratio

Loss ratios vary depending on the type of insurance. For example, for health insurance the loss ratio tends to be higher than for property and casualty such as car insurance. This is an indicator of how well an insurance company is doing. This ratio reflects if companies are collecting premiums higher than the amount paid in claims or if it is not collecting enough premiums to cover claims. Companies that have high loss claims may be experiencing financial trouble.

2010

2. Loss Ratio

Loss ratios vary depending on the type of insurance. For example, for health insurance the loss ratio tends to be higher than for property and casualty such as car insurance. This is an indicator of how well an insurance company is doing. This ratio reflects if companies are collecting premiums higher than the amount paid in claims or if it is not collecting enough premiums to cover claims. Companies that have high loss claims may be experiencing financial trouble.

2009

2. Loss Ratio

Loss ratios vary depending on the type of insurance. For example, for health insurance the loss ratio tends to be higher than for property and casualty such as car insurance. This is an indicator of how well an insurance company is doing. This ratio reflects if companies are collecting premiums higher than the amount paid in claims or if it is not collecting enough premiums to cover claims. Companies that have high loss claims may be experiencing financial trouble.

2. Loss Ratio 2008

Loss ratios vary depending on the type of insurance. For example, for health insurance the loss ratio tends to be higher than for property and casualty such as car insurance. This is an indicator of how well an insurance company is doing. This ratio reflects if companies are collecting premiums higher than the amount paid in claims or if it is not collecting enough premiums to cover claims. Companies that have high loss claims may be experiencing financial trouble.

2. Loss Ratio 2007

Loss ratios vary depending on the type of insurance. For example, for health insurance the loss ratio tends to be higher than for property and casualty such as car insurance. This is an indicator of how well an insurance company is doing. This ratio reflects if companies are collecting premiums higher than the amount paid in claims or if it is not collecting enough premiums to cover claims. Companies that have high loss claims may be experiencing financial trouble.

3. Expense Ratio

USBR calculates the expense ratio of an insurance company by dividing underwriting expenses by net premiums earned. Underwriting expenses are the costs of obtaining new policies from insurance carriers. The lower the expense ratio the better because it means more profits to the insurance company.

3. Expense Ratio 2010

USBR calculates the expense ratio of an insurance company by dividing underwriting expenses by net premiums earned. Underwriting expenses are the costs of obtaining new policies from insurance carriers. The lower the expense ratio the better because it means more profits to the insurance company.

3. Expense Ratio 2009

USBR calculates the expense ratio of an insurance company by dividing underwriting expenses by net premiums earned. Underwriting expenses are the costs of obtaining new policies from insurance carriers. The lower the expense ratio the better because it means more profits to the insurance company.

3. Expense Ratio 2008

USBR calculates the expense ratio of an insurance company by dividing underwriting expenses by net premiums earned. Underwriting expenses are the costs of obtaining new policies from insurance carriers. The lower the expense ratio the better because it means more profits to the insurance company.

3. Expense Ratio 2007

USBR calculates the expense ratio of an insurance company by dividing underwriting expenses by net premiums earned. Underwriting expenses are the costs of obtaining new policies from insurance carriers. The lower the expense ratio the better because it means more profits to the insurance company.

4. Combined Ratio

This figure just measures claims losses and operating expenses against premiums earned. The lower the figure the better. The combined ratio is the total of estimated claims expenses for a period plus overhead expressed as a percentage of earned premiums. A ratio below 100 percent represents a measure of profitability and the efficiency of an insurance firms underwriting efficiency. Ratios above 100 percnet denote a failure to earn sufficient premiums to cover expected claims. High ratios can usually occur either because of underpricing and/or because of unexpected high claims.

Combined Ratio =(Loss Ratio + Expense Ratio)

=(0.76 +0.2)

=0.96

4. Combined Ratio 2010

This figure just measures claims losses and operating expenses against premiums earned. The lower the figure the better. The combined ratio is the total of estimated claims expenses for a period plus overhead expressed as a percentage of earned premiums. A ratio below 100 percent represents a measure of profitability and the efficiency of an insurance firms underwriting efficiency. Ratios above

100 percnet denote a failure to earn sufficient premiums to cover expected claims. High ratios can usually occur either because of underpricing and/or because of unexpected high claims.

Combined Ratio =(Loss Ratio + Expense Ratio)

=( 0.52+0.22)

=0.74

4. Combined Ratio 2009

This figure just measures claims losses and operating expenses against premiums earned. The lower the figure the better. The combined ratio is the total of estimated claims expenses for a period plus overhead expressed as a percentage of earned premiums. A ratio below 100 percent represents a measure of profitability and the efficiency of an insurance firms underwriting efficiency. Ratios above 100 percnet denote a failure to earn sufficient premiums to cover expected claims. High ratios can usually occur either because of underpricing and/or because of unexpected high claims.

Combined Ratio =(Loss Ratio + Expense Ratio)

=(0.36 +0.22)

=0.58

4. Combined Ratio 2008

This figure just measures claims losses and operating expenses against premiums earned. The lower the figure the better. The combined ratio is the total of estimated claims expenses for a period plus overhead expressed as a percentage of earned premiums. A ratio below 100 percent represents a measure of profitability and the efficiency of an insurance firms underwriting efficiency. Ratios above 100 percnet denote a failure to earn sufficient premiums to cover expected claims. High ratios can usually occur either because of underpricing and/or because of unexpected high claims.

Combined Ratio =(Loss Ratio + Expense Ratio)

=(0.24 +0.24)

=0.48

4. Combined Ratio 2007

This figure just measures claims losses and operating expenses against premiums earned. The lower the figure the better. The combined ratio is the total of estimated claims expenses for a period plus overhead expressed as a percentage of earned premiums. A ratio below 100 percent represents a measure of profitability and the efficiency of an insurance firms underwriting efficiency. Ratios above 100 percnet denote a failure to earn sufficient premiums to cover expected claims. High ratios can usually occur either because of underpricing and/or because of unexpected high claims.

Combined Ratio =(Loss Ratio + Expense Ratio)

=(0.48 +0.31)

=0.79

5. Capacity Ratio

This ratio measures the level of capital surplus necessary to write premiums. An insurance company must have an asset heavy balance sheet to pay out claims. Industry statuary surplus is the amount by which assets exceed liabilities. For instance: a ratio 0.95 -to 1 means that insurers are writing less than $1.00 worth of premium for every $1.00 of surplus. A ratio of 1.02-to-1 means insures are writing about $1.02 for every $1.00 in premiums.

5. Capacity Ratio 10

This ratio measures the level of capital surplus necessary to write premiums. An insurance company must have an asset heavy balance sheet to pay out claims. Industry statuary surplus is the amount by which assets exceed liabilities. For instance: a ratio 0.95 -to 1 means that insurers are writing less than $1.00 worth of premium for every $1.00 of surplus. A ratio of 1.02-to-1 means insures are writing about $1.02 for every $1.00 in premiums.

5. Capacity Ratio

This ratio measures the level of capital surplus necessary to write premiums. An insurance company must have an asset heavy balance sheet to pay out claims. Industry statuary surplus is the amount by which assets exceed liabilities. For instance: a ratio 0.95 -to 1 means that insurers are writing less than $1.00 worth of premium for every $1.00 of surplus. A ratio of 1.02-to-1 means insures are writing about $1.02 for every $1.00 in premiums.

5. Capacity Ratio

This ratio measures the level of capital surplus necessary to write premiums. An insurance company must have an asset heavy balance sheet to pay out claims. Industry statuary surplus is the amount by which assets exceed liabilities. For instance: a ratio 0.95 -to 1 means that insurers are writing less than $1.00 worth of premium for every $1.00 of surplus. A ratio of 1.02-to-1 means insures are writing about $1.02 for every $1.00 in premiums.

5. Capacity Ratio

This ratio measures the level of capital surplus necessary to write premiums. An insurance company must have an asset heavy balance sheet to pay out claims. Industry statuary surplus is the amount by which assets exceed liabilities. For instance: a ratio 0.95 -to 1 means that insurers are writing less than $1.00 worth of premium for every $1.00 of surplus. A ratio of 1.02-to-1 means insures are writing about $1.02 for every $1.00 in premiums.

P rofitability ratio

Since a major goal of the company is to attain a high level of profitability, we would like to see a high value for these ratios. We can relate the company’s profits to almost any item on the balance sheet or income statement (e.g., net income to total assets, net income to common equity, net income to sales, etc.)

6. Revenue ratio (Net Operating Income / Total Revenues)

This figure determines the profitability of an insurance company. It is the profits after all expenses and taxes are paid by the insurance company.

6. Revenue ratio (Net Operating Income / Total Revenues) 2010

This figure determines the profitability of an insurance company. It is the profits after all expenses and taxes are paid by the insurance company.

6. Revenue ratio (Net Operating Income / Total Revenues) 2009

This figure determines the profitability of an insurance company. It is the profits after all expenses and taxes are paid by the insurance company.

6. Revenue ratio (Net Operating Income / Total Revenues) 2008

This figure determines the profitability of an insurance company. It is the profits after all expenses and taxes are paid by the insurance company.

6. Revenue ratio (Net Operating Income / Total Revenues) 07

This figure determines the profitability of an insurance company. It is the profits after all expenses and taxes are paid by the insurance company.

7. Return on Assets USBR calculates the return on assets by dividing net operating income by Mean average assets. This figure shows the profitability on existing investment securities and premiums. The higher the return on assets the better the company is enhancing its returns on existing liquid assets.

7. Return on Assets 10USBR calculates the return on assets by dividing net operating income by Mean average assets. This figure shows the profitability on existing investment securities and premiums. The higher the return on assets the better the company is enhancing its returns on existing liquid assets.

7. Return on Assets 09USBR calculates the return on assets by dividing net operating income by Mean average assets. This figure shows the profitability on existing investment securities and premiums. The higher the return on assets the better the company is enhancing its returns on existing liquid assets.

7. Return on Assets 08USBR calculates the return on assets by dividing net operating income by Mean average assets. This figure shows the profitability on existing investment securities and premiums. The higher the return on assets the better the company is enhancing its returns on existing liquid assets.

7. Return on Assets 07USBR calculates the return on assets by dividing net operating income by Mean average assets. This figure shows the profitability on existing investment securities and premiums. The higher the return on assets the better the company is enhancing its returns on existing liquid assets.

8. Return on Equity Return on Equity ( Net Operating Income (less preferred stock Dividends / Average Common Equity )

This figure shows the net profits that are returned to shareholders. The higher the return on equity, the more profitable the company has become and the possibility of enhanced dividends to shareholders.

8. Return on Equity 10Return on Equity ( Net Operating Income (less preferred stock Dividends / Average Common Equity )

This figure shows the net profits that are returned to shareholders. The higher the return on equity, the more profitable the company has become and the possibility of enhanced dividends to shareholders.

8. Return on Equity 09Return on Equity ( Net Operating Income (less preferred stock Dividends / Average Common Equity )

This figure shows the net profits that are returned to shareholders. The higher the return on equity, the more profitable the company has become and the possibility of enhanced dividends to shareholders.

8. Return on Equity 08Return on Equity ( Net Operating Income (less preferred stock Dividends / Average Common Equity )

This figure shows the net profits that are returned to shareholders. The higher the return on equity, the more profitable the company has become and the possibility of enhanced dividends to shareholders.

8. Return on Equity 07Return on Equity ( Net Operating Income (less preferred stock Dividends / Average Common Equity )

This figure shows the net profits that are returned to shareholders. The higher the return on equity, the more profitable the company has become and the possibility of enhanced dividends to shareholders.

9. Investment Yield This is the return received on an insurance company's assets. The investment yield is obtained by dividing the average investment assets into the net investment income before income taxes.

9.Investment Yield 10

This is the return received on an insurance company's assets. The investment yield is obtained by dividing the average investment assets into the net investment income before income taxes.

9.Investment Yield 09

This is the return received on an insurance company's assets. The investment yield is obtained by dividing the average investment assets into the net investment income before income taxes.

9.Investment Yield 08

This is the return received on an insurance company's assets. The investment yield is obtained by dividing the average investment assets into the net investment income before income taxes.

9.Investment Yield 07

This is the return received on an insurance company's assets. The investment yield is obtained by dividing the average investment assets into the net investment income before income taxes.

Leverage ratio

10.Debt Ratio -- Indicates the percentage of the total assets that have been financed by debt.On the balance sheet, total assets must equal total liabilities and capital. In other words, total assets are equal to the amount of the company’s debt plus the amount of equity. Looked at another way, the company is financed with a combination of debt and equity. So this ratio simply measures the percentage of the total assets that are financed with debt. If the debt ratio is 40%, this means that the company has financed 40% of its assets with debt (borrowed money) and 60% with equity (investors’ money). This ratio is one way of measuring the financial leverage of the company: the higher the debt ratio, the higher the degree of financial leverage that the company has.

10

10.Debt Ratio -- Indicates the percentage of the total assets that have been financed by debt.On the balance sheet, total assets must equal total liabilities and capital. In other words, total assets are equal to the amount of the company’s debt plus the amount of equity. Looked at another way, the company is financed with a combination of debt and equity. So this ratio simply measures the percentage of the total assets that are financed with debt. If the debt ratio is 40%, this means that the company has financed 40% of its assets with debt (borrowed money) and 60% with equity (investors’ money). This ratio is one way of measuring the financial leverage of the company: the higher the debt ratio, the higher the degree of financial leverage that the company has.

09

10.Debt Ratio -- Indicates the percentage of the total assets that have been financed by debt.On the balance sheet, total assets must equal total liabilities and capital. In other words, total assets are equal to the amount of the company’s debt plus the amount of equity. Looked at another way, the company is financed with a combination of debt and equity. So this ratio simply measures the percentage of the total assets that are financed with debt. If the debt ratio is 40%, this means that the company has financed 40% of its assets with debt (borrowed money) and 60% with equity (investors’ money). This ratio is one way of measuring the financial leverage of the company: the higher the debt ratio, the higher the degree of financial leverage that the company has.

10.Debt Ratio -- Indicates the percentage of the total assets that have been financed by debt.On the balance sheet, total assets must equal total liabilities and capital. In other words, total assets are equal to the amount of the company’s debt plus the amount of equity. Looked at another way, the company is financed with a combination of debt and equity. So this ratio simply measures the percentage of the total assets that are financed with debt. If the debt ratio is 40%, this means that the company has financed 40% of its assets with debt (borrowed money) and 60% with equity (investors’ money). This ratio is one way of measuring the financial leverage of the company: the higher the debt ratio, the higher the degree of financial leverage that the company has.

10.Debt Ratio -- Indicates the percentage of the total assets that have been financed by debt.On the balance sheet, total assets must equal total liabilities and capital. In other words, total assets are equal to the amount of the company’s debt plus the amount of equity. Looked at another way, the company is financed with a combination of debt and equity. So this ratio simply measures the percentage of the total assets that are financed with debt. If the debt ratio is 40%, this means that the company has financed 40% of its assets with debt (borrowed money) and 60% with equity (investors’ money). This ratio is one way of measuring the financial leverage of the company: the higher the debt ratio, the higher the degree of financial leverage that the company has.

Market Ratio

11.Price-Earnings Ratio -- The price-earnings ratio is the most frequently used measure of a stock’s relative value. The price-earnings ratio tells us two things about a company’s stock:

It is a measure of how optimistic investors are about the company’s future growth in earnings and dividends. The higher the P/E ratio, the more optimistic investors are about the company’s future prospects.

It is a measure of the premium that you have to pay for the stock. For example, if a stock’s P/E ratio is 35 and the average P/E for all stocks is 18, investors are having to pay a considerable premium to acquire the stock (but may be getting a higher quality company).

On the other hand, if a stock’s P/E ratio is 8, we are able to buy the stock at a discount relative to other stocks (but may be getting an inferior company).

The P/E ratio is often used to help estimate the future price of the stock using this equation:

Pricen = [P/E ratio]n times [Earnings per share]n

where “n” refers to a specific year in the future.

For example, the price of a stock 3 years from now will be equal to the P/E ratio that the stock has 3 years from now times the earnings (per share) that the stock has 3 years from now. That is,

If we can estimate the value of the P/E ratio 3 years from now and the earnings expected at that time, we can use the equation to estimate the market price of the stock at that time

10

.09

08

07

12.Market value

12.Market value

12.Market value 09

12.Market value

12.Market value

13. Book value per shares

10