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Ratio analysis of Eastern Bank Ltd.BUS 635 (Managerial
Finance)Prepared by
NameIDMohammad Sakib Sujaet132 1591 660Mohammad Murtoza Ali
Quader132 0778 660Shaikh Sarfaraz Ahmad101 0451 060Md Khaled
Rabbani101 0326 560Ratio analysis of Eastern Bank Ltd.
Financial performance evaluation of EBL 2011 - 2014
1. Profit RatioReturn on Equity (ROE)Return on Assets
(ROA)Profit MarginNet Interest MarginAsset Utilization2. Risk
RatioCapitalEquity MultiplierAsset qualityProvision for Loan Loss
RatioLoan Ratio3. Operating Efficiency RatioInterest Expense
RatioWages and Salaries RatioOccupancy RatioOther Expenses Ratio4.
Other Financial RatioTax RateDollar Gap RatioReturn on Equity
(ROE)The amount of net income returned as a percentage of
shareholders equity. ROE= (Net Income Total Equity) 100
Return on Equity (ROE)=Net Income After Taxes/Total
Equity201420132012201110.93%14.48%14.18%19.03%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.ROA= (Net Income Total
Asset) 100
Return on Assets (ROA)=Net Income After Taxes/Total
Assets20142013201220111.28%1.60%1.63%2.52%Profit MarginA ratio of
profitability calculated as net income divided by revenues, or net
profits divided by sales.Profit Margin= (Net Income Operating
Revenue) 100Profit Margin=Net Income After Taxes/Total Operating
Income201420132012201120.72%26.46%27.13%32.28%Net Interest MarginA
performance metric that examines how successful a firm's investment
decisions are compared to its debt situations.Net Interest Margin =
[(Total Interest Income - Total Interest Expense) / Total Assets] x
100Net Interest Margin=(Total Interest Income - Total Interest
Expense) / Total Assets20142013201220112.374%3.13%3.32%2.87%Asset
UtilizationAn assets utilization (activity, turnover) ratio
reflects the way in which a company uses its assets to obtain
revenue and profit.Asset Utilization = (Total Operating Income/
Total Assets) x 100Asset Utilization=Total Operating Income/Total
Assets20142013201220115.993%6.06%6.00%6.73%Equity MultiplierThe
ratio of a companys total assets to its stockholders equity. The
equity multiplier is a measurement of a companys financial
leverage. Equity Multiplier = (Total Assets/ Total Equity)Equity
Multiplier=Total Assets/Total Equity20142013201220118.51 times8.72
times8.71 times8.06 timesProvision for Loan Loss RatioBanks use the
loan-loss coverage ratio to define the quality of its assets and
how well it protects itself from losses caused by problematic
loans. The higher this ratio is, the better the bank is handling
itself in regards to loans.Provision for Loan Loss Ratio =
(Provision for Loan Losses/ Total Loans and Leases) x 100Provision
for Loan Loss Ratio=Provision for Loan Losses/Total Loans and
Leases20142013201220111.51%0.76%0.78%1.67%Loan RatioA commonly used
statistic for assessing a bank's liquidity by dividing the banks
total loans by its total assets.Loan Ratio = (Total Loans and
Leases/ Total Asset) x 100Loan Ratio=Total Loans and Leases/Total
Asset201420132012201169.72%65.33%65.89%69.55%Interest Expense
RatioThe proportion of assets required to pay annual interest
expenses of a bank is known as interest expense ratio. The lesser
the ratio, the better is for banks.Interest Expense Ratio =
(Interest Expense/ Total Asset) x 100Interest Expense
Ratio=Interest Expense/Total
Asset20142013201220115.16%6.26%6.02%5.42%Wages and Salaries RatioIn
economics, the wage ratio refers to the ratio of the top salaries
in a group (company, city, country, etc.) to the bottom
salaries.Wages and Salaries Ratio = (Wages and Salaries/ Total
Asset) x 100Wages and Salaries Ratio=Wages and Salaries/Total
Asset20142013201220111.39%1.26%1.20%1.26%Occupancy RatioThe
occupancy ratio is simply the sum of all operating expenses and
debt service, divided by total assets. This tells us what
percentage of the total asset is used to cover occupancy
cost.Occupancy Ratio = (Total Occupancy Cost/ Total Asset) x
100Occupancy Ratio=Total Occupancy Cost/Total
Asset20142013201220110.40%0.56%0.53%0.37%Other Expenses RatioThe
proportion of assets required to cover the operating expenses is
called other expenses ratio. The less is the ratio, the better is
for banks.Other Expenses Ratio = (Other Expenses/ Total Asset) x
100Other Expenses Ratio=Other Expenses/Total
Asset20142013201220110.33%0.55%0.52%0.27%Tax RateThe tax rate
describes the ratio (usually expressed as a percentage) at which a
business or person is taxed.Tax Rate = (Total Tax Expenses/ Net
Profit Before Taxes) x 100Tax Rate=Total Tax Expenses/Net Profit
Before Taxes201420132012201147.21%47.62%45.24%39.22%
