Final Suleman Ghaffar

Executive MBA Business Report on
FAYSAL BANK LIMITED
SUPERVISED BY: SIR HAMMAD RAZA SAHOO
SUBMITTED BY: SH, SULEMAN GHAFFAR

MBA (Executive)
DEPARTMENT OF BUSINESS ADMINISTRATION

BAHAUDDIN ZAKARIYA UNIVERSITY, MULTAN
Letter of Undertaking
I hereby undertake that the work contained in the report is written Suleman Ghaffar Roll No.
2k13-BBA-07 of master’s in business administration has been carried out under the supervision
of Sir Hammad. I also hereby declare that this report has not been submitted for any degree
elsewhere.
------------------------------
Suleman Ghaffar
MBA (Executive)
4. Dedication
I would like to dedicate this internship report to my family who have always support me
throughout in my academic career. And give possibility for my dream to come true.
5. Acknowledgement
Although only my name appear on the cover but this work was done with the invisible guidance
of “ALLAH”. I am thankful to “ALLAH” for giving me analytical approach & skill to construct
the underlying internship report.
Along with my efforts was a collaborative effort of seniors.
Thanks to my brother Jahan Zaib Javed Who support my activities regarding internship and
report. I am grateful to kind and honorable Mr. Ather Khan (Branch manger) who give me an
opportunity to work in such a reputable organization.
I am also thankful to Mr. Bilal Amin (B.S.O), Mis. Asma Tafail (R.O), Mr. Safdar (Teller),
Mr. Shafique (Operations manager). This report cannot complete without their kind guidance.
7. Table of contents
1. Title page .......................................................................Error! Bookmark not defined.
2. Letter of Undertaking .....................................................Error! Bookmark not defined.
3. Internship Certificate .....................................................Error! Bookmark not defined.
4. Dedication ....................................................................................................................... 1
5. Acknowledgement .......................................................................................................... 5
6. Executive summary ........................................................ Error! Bookmark not defined.
8. Brief introduction of the Organization’s Business Sector .............................................. 7
9. Overview of the organization.......................................................................................... 8
(a) Brief history .............................................................................................................. 8
(b) Organizational Hierarchy chart ................................................................................. 9
(c) Business volume ...................................................................................................... 10
(d) Product lines ............................................................................................................ 11
e. Competitors: .............................................................................................................. 13
f. Brief Introduction of all the Departments.................................................................. 14
g. Comments on the organizational structure ................Error! Bookmark not defined.
10. Plan of Internship Program: ........................................................................................ 16
a. A brief introduction of the branch (FBL) Where I did my Internship: ..................... 16
b. Starting and Ending dates of my Internship:............................................................. 16
c. Names of Departments in which I got training: ........................................................ 17
11. Training Program: ....................................................................................................... 17
Detailed description of the tasks assigned by me: ................................................ 17
12. Ratio analysis: ............................................................................................................. 22
a). Liquidity ratios:........................................................................................................ 22
b) Leverage Ratios: ........................................................ Error! Bookmark not defined.
c) Profitability Ratios: ................................................................................................... 37
d) Activity Ratios: ......................................................................................................... 47
e) Market Ratios:........................................................................................................... 50
(1). Trend Analysis: ...................................................................................................... 54
(13). Future Prospects of FBL .......................................................................................... 57
14. Conclusion .................................................................................................................. 57
15. Recommendations for Improvement........................................................................... 58
16. Reference & Sources used ..........................................Error! Bookmark not defined.
17. Annexes: ..................................................................................................................... 62
8. Brief introduction of the Organization’s Business Sector
Faysal Bank limited incorporated in Pakistan on October3, 1994 as a public limited company
under companies’ ordinance 1984. Its shares are listed on Karachi, Lahore and Islamabad stock
exchanges. The Bank is engaged in commercial, consumer, and corporate banking activities.
Faysal Bank limited incorporated with authorized share capital Rs.1.5 billion and 129 branches
offices with 2 service centers. It provides services to its customers in Pakistan four provinces.
Under Barkat Islamic brand it provides Islamic banking services in Pakistan. After its
incorporation in Pakistan it progress rapidly and thus become largest reliable banking service
provider. Currently Faysal Bank limited paid up capital is Rs.62.3 billion.
In 1st Jan 2002, the two entities of the group in Pakistan. Faysal Bank Limited & AL Faysal
Investment Bank Limited merged into one & today only Faysal Bank Limited remains as a
larger, stronger & much more versatile institution amongst private banks in the Pakistan. In
fact it is amongst the three largest I terms of equity which after the mergers stands at over Rs.
4.0 billions. The total balance sheet size of FBL after the merger is in excess of Rs. 40 billions.
Faysal bank limited play important role in Pakistan for growth of cricket by organizing
National Twenty 20 cup on October 10th at Gadaffi stadium in Lahore. Also annual report of
FBL for the year 2003 won the third prize in “The Best Corporate Report” contest in the service
sector, a competition jointly instituted by the institute of Chartered Accountants of Pakistan &
Institute of Cost & management of Pakistan. Faysal Bank limited is a commercial bank which
provides customers and client services. Its effective market research and modern information
technology help him in reaching its consumers in no time. Also timely recovery of loan and
efficient credit system facilitate its rapid growth.
9. Overview of the organization
(a) Brief history

Faysal Bank limited incorporated year1984 in Pakistan. Syed Naseem Ahmad is chairman of
this bank. Faysal bank limited with approval of State Bank of Pakistan (SBP) take over 99.37
percent shares of Royal Bank of Scotland (RBS) Pakistan. The RBS Pakistan recently
announce finalization of agreement with Faysal Bank limited for the sale of 99.37 percent
shares holdings for Rs.4.298 billion, with approval from State Bank of Pakistan. Faysal Bank
buys RBS Pakistan for €41m ($51m).
Faysal Bank limited deposits in year 2005 are Rs. 74.7 billion, advances amounted to Rs. 62.3
billion; assets totaled Rs.110.3 billion.
(b) Organizational Hierarchy chart
PRESIDTNT
SENIOR
EXECUTIVE VICE
PRISEDENT
EXECUTIVE VICE
PRESIDENT
SENIOR VICE
PRESIDENT
VICE PRESIDENT
ASSISTANT VICE
PRESIDENT
OFFICERS
GRADE I, II, III
CLERKS
PEONS
(c) Business volume
Categories of No. of Share Shares Held Percentage %

Shareholders Holders
Individuals 12702 48,567,659 6.64
Investment 7 182,586 0.02
Companies
Joint Stock 116 2,545,253 0.35
Companies
Directors, Chief 7 31,742 0.00
Executives and their
Spouse and Minor
Children
Executives 8 134,798 0.02
NIT / ICP 6 12,866,804 1.76
Associated 9 489,288,181 66.94
Companies,
Undertakings and
related Parties
Public Sector 0 0 0.00
Companies and
Corporations
Banks, DFIs, 34 51,456,072 7.04
NBFIs, Insurance
Companies
Modarabas and
Mutual Funds
Financial 11 7,543,004 1.03
Institutions
Leasing Companies 2 367 0.00
Insurance 10 43,573,854 5.96
Companies
Modarabas 5 13,213 0.00
Mutual Funds 6 325,634 0.04
Foreign Investors 39 124,984,701 17.10
Co-operative 1 861 0.00
Societies
Charitable Trusts 7 670,104 0.09
Others 11 180,611 0.02
Total Outstanding 12947 730,909,372 100.00
Shares
(d) Product lines

1. Faysal Sahulat Current Account:
It allows you to access to your account in any Faysal Bank branch without any limitation.
Faysal Sahulat Features and Benefits:
 Minimum balance is required Rs.5000/-
 On maintaining monthly average balance of Rs.500000/- offer following services
free of charge:
 Chequebook (up to 100 leaves per year)
 Pay orders (up to 50 per year)
 Monthly account statement
 You can access you account through ATM/ Debit Card also
 Example of Faysal Bank Sahulat Current account number 02280060001234
2. Faysal Savings Account:

Faysal Savings account addresses your basic banking needs. It allows you to get profit on your
savings.
Faysal Savings Features and Benefits:
 Minimum balance of Rs.10000/ is required
 Profit is calculated on the monthly minimum balance
 Profit is paid semi-annually
 Un-limited transactions can be made during a month
 Example of Faysal Savings account number 02281500001234
3 Faysal Izafa Term Deposit:
Faysal Izafa term deposit account allows you to receive profit on monthly, semi-annually,
quarterly, or annual basis.
Faysal Izafa Features and benefits:
 Minimum investment of Rs.25000/ is required
 Flexible tenure options ranging from 1,3 and 6 months and 1,2,3,4, and 5 years
 Allows you to select option of your own choice for receiving profit
 This account free from any account maintenance charges
4 Faysal Anchor Savings Account:
This account is designed for those customers who want monthly profits on their account.
Features:
 Minimum balance required is Rs.20000/
 Profit is calculated on monthly minimum balance
 Un-limited transactions can be made during a month
 Profit paid on monthly basis
Consumer lending
 Faysal Home finance:
Faysal home finance allows you to get you own home, away from financial worries.
Buying you new Home:
 Easy facility for re-payment of loan
 Maximum financing available up to 70% of market value of property
 Amount payable in between 3years to 20years
 Amount payable in monthly installments
Building of Home:
 Financing available is up to 70% value of land plus construction
 Amount payable in between 1year to 20years
 Repayment of amount in monthly installments
Faysal Car Finance:

Due to Faysal Car Finance now it is easy to be in the driver seat. It also involves insurance
from reputable insurance company in Pakistan.
 Eligibility:
 For salaried individuals your age should be between 21 and 60years
 For Businessmen: You should be aged between 21 and 65years
 Incase you are salaried, or businessmen you have work experience or employment
history of at least 2years
 Minimum net income is Rs.30000/ per month
Services:
Faysal Bank Limited provides services are listed bellow:
 Utility services
 Retail services
 Value Added services
 Payment with Faysal Bank, Micronet Broadband – DSL Services
 Specialized services to priority customers
Now I want to explain some more Faysal Bank services.
Demand Drafts:
Faysal Bank Limited provides demand draft service to its account holders and non account
holders. For example is any Faysal Bank account holder wants to make any other organization
or department then Faysal Bank limited help him in this regard by creating demand draft for
certain amount. On amount of Rs.10 to 100000 it charge Rs.150 from account holder of Faysal
Bank Limited. But for non-account holders it charge Rs.800 for Demand Draft.
PocketMate (Debit Card):
Faysal bank provides easy way to carry cash in form of PocketMate service. Faysal pocketmate
provides you the freedom of world wide acceptability at over 29 million points of sale
terminals.
Faysal Instant SMS Alerts:
This service provides Instant SMS Alert information about your account when some
transaction made with help of Visa Debit Card or your account locally and globally. It provides
information on cash deposits and withdrawals, bill payment, cheque clearing and also on Zakat
deductions.
e. Competitors:
 Allied Bank Limited
 National Bank of Pakistan
 Muslim Commercial Bank
 Bank Alfalah Limited
 AL-Habib Bank Limited
 Askari Commercial Bank
 United Bank Limited
 Habib Bank Limited
 Meezan Bank Limited
 Standard Chartered Bank Pakistan
 JS Bank
 Soneri Bank
f. Brief Introduction of all the Departments

Account Opening department:
This department is responsible for account opening of its customers. During my internship in
Faysal Bank Limited I observed the general procedure of account opening which I like to
discuss here.
1. Customer relationship Form:
This form helps customer in facilitating account opening in Bank. Customer furnishes his
information regarding name, occupation, address and many other personal information.
2. Requirements for opening of Account:
Many things involve in this step for account opening I like to mentions here some requirement
which is crucial.
 Copy of C.N.I.C attested
 Specimen signature card
 Source of income
Operations Department:
I observed this department in Faysal Bank Limited during my internship period and Operations
manager of this FBL is Mr. Shafique. This department manages all departments of Bank.
Operations manager is responsible for Cash department, remittances department, and clearing
department work.
Remittance Department:
In this department funds transfer from one Bank branch to another same branch. This is
valuable and important service of the Faysal Bank Limited which it provides to its customers.
Remittances Types:
Demand Draft:
This service is providing by Faysal Bank Limited in which some certain amount is transferred
to other same branch of the Bank. In this service Bank charge some amount for delivering
service to its clients. Some organizations or companies demand for this order to pay.
Telegraphic Transfer:
This tremendous service is provided by FBL to its client facilitating in transferring amount
from one city to other or other country in no time. The remittances take place through telegram,
telex and some times the message is also conveyed on telephone. TT is used to remit money
outside the city.
Payment Order:
It allows you to transfer fund from one Faysal Bank branch to other same city branch of FBL
or to any 1-link member bank account using your Faysal Pocketmate. Enjoy transfer of fund
with limit of Rs.250000/ daily.
Cash Department:
This department is the backbone of Bank. In this department all receipts and payments of cash
is made. This department for receipts and payments prepare books of account and ledgers and
many other cash sheets.
All bank business is wholly depends on cash and without it becomes impossible to sustain in
this competitive environment. It also deals with collection of utility bills.
Credit Department:
Faysal bank credit department provides financing assistance to commercial, industrial sectors.
Faysal bank also provides assistance to agriculture sector in order to meet incurred expensed
of farmers. Attractive low interest rate is charged on lending by bank.
Interest is charged on the whole amount of a loan. Different documents are required vary
according to financing applicant. Faysal bank also provides consumer financing to its clients.
It extends both short and long term financing facilities designed to fulfill the individual need
of each corporate customers.
g. Comments on the organizational structure

In Faysal Bank Limited flow of power and designations is well organized and processed in
structural way by fulfills the requirements of the organization. Structure of FBL according to
my observation fulfills the requirements of the organization.
In this section you are required to write your opinion regarding the organizational structure of
the organization. Whether the organizational structure of the organization is best suited for the
organization in fulfilling the requirements of the organization or it needs to be changed.
Mention any hurdle it creating in the smooth functioning of the organization.
10. Plan of Internship Program:
a. A brief introduction of the branch (FBL) Where I did my Internship:

Faysal Bank Limited branch is only one main branch in District Toba Tek Singh.
Faysal Bank Limited is located in the city most commercial area and competitive place where
others bank situated. It located in the city main area namely Farooq Road Toba Tek Singh.
Now I like to tell about Farooq road which is the busy and business area of the Toba Tek Singh.
Where others bank also situated like, United Bank Limited, Bank Alfalah Limited, Habib Bank
Limited, AL-Habib Bank Limited, Meezan Bank Limited, Bank of Punjab, Allied Bank
Limited so due to all these Bank in one main city area it creates highly competitive environment
among all of these. I observed during my internship in Faysakl Bank Limited that many
Government and also Semi-Government institutions like training institutions, technical training
institutions, and colleges have account in this Bank.
An advantage of Faysal Bank Limited location is that many city busy shops, departmental
stores are located in that place. So, due to this priority for Faysal Bank Limited mostly owners
of these businesses have their customer relations with Faysal Bank. In the said branch there are
7 staff members. All employees of this bank have friendly relations and good environment
which facilitate customers in impressive way. Branch Manager Mr. Rana Ather Khan has very
impressive personality and good co-operative behavior.
b. Starting and Ending dates of my Internship:

I start my internship programme 18th April 2011 and lat date of my Internship programme was
30th May 2011.
c. Names of Departments in which I got training:
During my internship in Faysal Bank Limited I got training in following departments listed
below:
 Deposit Department
 Bills clearing Department
 Remittance Department
 Credit Department
Duration of Internship Program:
My internship duration was 6 weeks.
11. Training Program:
 Detailed description of the tasks assigned by me:

During my internship program in Faysal Bank Limited Toba Tek Singh branch I worked in
deposit, remittance, bills clearing and credit department. And I successfully completed all tasks
that were assigned to me. There are 6 departments in the branch and I worked as internee in
that branch during my internship period. I performed the following different tasks:
First of all I Filled deposit slips and cheques of many bank customers and I also filled customer
relationship formI provided details and guidance to new customers.I also got verification from
NADRA about newly come customers.I informed customers about essential conditions which
helpful them in smooth operating of their account.
I fill letter of Thanks in order to welcome new account holders sent by Faysal bank limited.In
manual work I assign account numbers of new Faysal bank customers
Now I would like to discuss many other tasks which I fulfilled during my internship in FBL.
Describe in detail duties and task assigned to you and how you accomplish them.
Not just bullets or list of the activities performed by you.
Account opening:
In account opening department I spent two weeks of my internship program. During my
internship I opened new accounts of customers concerning current, savings, or term deposits.
I fill Customer Relationship Form (CRF) of Faysal bank limited.
When a customer comes to open his account, he has to fill a relationship contract with
the bank. As part of my internship I had to fill these forms and then use the appropriate bank
stamps to complete these forms. Also as part of the relationship form, I also had to do a
‘Verisys’, a verification system started by NADRA on the CNIC of the new account opener.
A ‘Verisys’ tells, if more information pertaining to the customer is needed to open the account
or not.
a. Individual accounts requirement (documents):

 Copy of CNIC
 For business individuals copy of NTN certificates
 Proof of employment
 Passport size photograph
 Left and right thumb impressions (for illiterate person)
b. Partnership (documents required):

 Copy of partnership deed
 CNIN copy of partners
 Copy of NTN (where available)
 Attested copy of registration certificates with registrar of firms
 Any other (if required)
c. Public / Private Limited Company:

 Copy of certificate of incorporation
 Memorandum and articles of association
 List of directors on prescribed format
 Copies of CNIC of all directors
 Copy of board resolution (if required)
 Certificate of commencement of business
d. Club / Society Association:
Faysal Bank Limited also provides services for account opening of clubs/ society/ or associates.
Documents which required for account opening are provided below:
 Certificate of registration
 Certified copy of resolution of the governing body for opening the account
 Authorized person(s) to operate the account
 Copy of CNIC of authorized persons
 Undertaking signed by all authorized persons mentioning intimation to the bank in case
of change of authorized persons operating the account
Credit department (FBL):
During my internship program in Faysal bank limited I also come to know about credit
department. Faysal bank provides financing assistance to different sectors. It provides loans to
following sectors:
 Agriculture sector
 Industrial financing
 Consumer lending
Faysal khushaal Kisan Scheme:

Agricultural loan provides to farmers. Loan amount can be used for crops or used for repair of
machinery used in crops for agricultural purposes. E.g. Loan for purchase of seeds, Repair of
tractor use in crops, betterment of irrigation, repair of tube well etc. Faysal bank provides
special products for agricultural sectors.
Production loans to meet cost of seeds, pesticides, storage, labor, and for others working
capital requirements.
Development purposes it provides for machinery used in farms, irrigations betterment, meet
cost of Godowns, and for land improvement.
Documents required:
 Two recent passport size photos along with application form, copy of computerized
CNIC Guarantors (where applicable)
 Updated Zari Pass book or title documents of other properties offered as security along
with valuation certificate and other relevant documents on case to case basis
Consumer financing (Personal finance):

Faysal bank limited also provides lending for freedom from worries. Lower charges levy on
borrower by bank. Bank provides easy and affordable schedule for repayment of loan.
Documents required:
 Computerized identity card of applicant
 Source of income
 Proof of employment (In case of salaried person)
 Email address (if any)
SME Financing (Small & Medium Enterprise Financing):

SME unit of the bank geared towards catering to banking requirements of small to medium
businesses in timely and cost effective manner. Faysal bank limited equipped to increase
customers’ strength by providing bakers and financial advisor and services.
Cheque Book issuance:
Bank issued cheque book only account holders of the bank. Cheque book issued by bank to its
customers only when two conditions are fulfilled which are:
At the times of opening new account
When existing account holder have no cheque in his cheque book to issue for payment
Many steps for issuance of cheque book are provided below:
When customer need for new cheque book it only issued when he filled
“Requisition form” provided by bank
Cheque book contains leaves which are 25, 50, or 100 as required by customer in CRM fill
form.
Minimum charges for issuing of cheque book which I observed during my internship
program in faysal bank are Rs.125/.
In the last cheque book issued only when branch manager gives his assent in this regard after
verifying all information provided by customer I like to explain briefly about post dated cheque
and out dated cheque which presented in Faysal bank limited during my internship.
Post dated cheque:
These are cheques on which upcoming future date is written. And its payment is only made on
that coming date before due that it cannot en-cash from bank.
Example:
If Akram present cheque in bank on 1st March 2011, but date mentioned on cheque is 15th
April. It is post dated cheque.
Outdated cheque:
Outdated cheques are those on which past date is written. It can be clear from bank up to 6
months. Date mention on the cheque earlier than on which date it presented in the bank for
payment is called outdated cheque.
Example:
Faysal bought some furniture from S.B Furniture on 1st April 2011. He gives them cheque for
payment purposes. Date mentioned on cheque was 15th March 2011. So this is outdated on
which date written is earlier than when it presented by S.B Furniture in the bank for payment.
Clearing department:
I worked in the clearing department of the Faysal bank limited for 8 days. Main branch receives
the cheques from all of its branches and makes the lots of these cheques again. All banks
representative together on National Bank of Pakistan. Where they present drawn cheques on
different branches and receive their own cheques from them. Record is maintained in National
bank of Pakistan. Then main branch sends these cheques to their relevant branches where the
validity of these cheques is verified and the accounts of the relevant clients are affected.
I worked under kind supervision of Mr. Asif. He helped me about clearing work. And I come
to know about different types of clearing:
 Outward clearing
 Inward clearing
 Online clearing
Outward clearing:
In outward clearing cheques of other banks are presented in Faysal Bank by its customer for
clearing.
Inward clearing:
In Inward clearing cheques of our bank (FBL) is presented in other bank
and it is received by the Faysal Bank Limited through NIFT (National institutional facilitation
technologies) for clearing.
Online clearing:
In online clearing cheques presented in any branch of the bank for
clearing purposes made through online. I did not have the opportunity for details because online
departments work is a sensitive area and electronic based.
Some Miscellaneous work:
In addition to these work I did some various tasks which assign
me during my internship period. I got some knowledge about software of the bank named
Symbol. I also learned how to post utility bills in the computer. I knew about the current balance
of account holder when inquired. I knew about Stamps which used in documentation work. I
also filled Demand draft and also got knowledge about online work.
I also opened new accounts of the customers. After opening the newly accounts I took customer
signature on Specimen signature card. I also got knowledge about how to opened account of
Illiterate person accompanying two recent passport size photos and also signs of left used
instead of signature
I also filled requisition form for customer when he request for issuance of new cheque book
and also filled Customer Relation Form when he want service of ATM Card.
I also filled form when account holder needs Alert SMS service provided by Faysal Bank
Limited.I knew about that account holders can transact online through Faysal Bank Limited
without any charges.
12. Ratio analysis:
a). Liquidity ratios:

Liquidity ratios help in assessing the firm’s ability to meet its short term
obligations. Current assets include following listed below:
(1). Marketable securities
(2). Cash
(3). Accounts receivable
(4). Prepaid expenses
(5). Inventories
Current liabilities which considers in calculation are listed below:
(1). Accounts payable
(2). Accrued expenses
(3). Short term notes payable
(4). Taxes payable
(5). Current portion of LTD
For year 2008 (Rupees in ‘000’):
Current ratio = Current Assets / Current Liabilities recalculate
= 132,610,662 / 117,340,778
= 1.13:1
For the segregation of current and long term Assets/Liabilities, use the table of Maturities of
Assets and Liabilities given in the Notes financial statements of the bank under the heading
Liquidity Risk to identify the current and long-term portion in assets and liabilities.
You are required to add the items specifying maturity of less than 1 year that will be treated as
current and add all the items specifying the maturity of greater than 1 year that will be treated
as non-current or long-term items.
Current Assets = Cash and balances with treasury banks + Balances with other banks
+ lending to financial institutions + investments + advances Commented [m1]: These can be short term as well as long term.
= 8927524 + 876780 + 2861401 + 30186168 + 89758789
= 132,610,662
Current liabilities = Bills payable + Borrowings from financial institutions
+ Deposits and other accounts
= 1536517 + 13027468 + 102776793
= 117,340,778
Current ratio = Current Assets / Current Liabilities
=171,831,162 / 160,106,405
= 1.07:1
+ lending to financial institutions + investments + advances
= 8427202 + 508795 + 15017826 + 56531338 + 91346001
= 171,831,162
Current liabilities = Bills payable + Borrowings + Deposits and other accounts
= 1465451 + 34985766 + 123655188
= 160,106,405
Current ratio = Current Assets / Current Liabilities

= 243,282,151 / 233,169,967
= 1.04:1
+ lending to financial institutions + investments + advances
= 17428924 + 5727909 + - + 86418549 + 133706769
= 243,282,151
Current liabilities = Bills payable + Borrowings + Deposits and other accounts
= 3218859 + 34635904 + 195315204
= 233,169,967
(Rupees in ‘000’)
Current ratio
Current Assets / Current Liabilities
Year 2008 Year 2009 Year 2010
132,610,662 / 117,340,778 171,831,162 / 160,106,405 243,282,151 / 233,169,967
= 1.13 = 1.07 = 1.04
1.14
1.12
1.1
1.08
Ratio 1.06
1.04
1.02
1
0.98
2008 2009 2010
Years
\
Interpretation:
Standard for current ratio is 2:1 . During three years ratio not meet standard requirement and
gives unsatisfactory result.
Dear Student, while calculating each ratio, you have to write the answers of the following
question:
1- What it is intended to measure? And why we might be interested? (Your Introduction section
should cover this question)
2- What is the unit of measurement? (Mention the unit of ratio in the Introduction section and
also along with the calculated ratios.
3- How is it computed? (Your formula and calculation will answer this question)
4- What might a high or low value be telling? What are the reasons of these high or low values?
And how might such values be misleading? (Write this detail in your Interpretation section).
Guidelines for Interpretation of Ratios

The following guidelines will help to understand what interpretation means and how it should
be done.
What does interpretation of ratios mean?

Interpretation means explanation of the ratios results. It does not mean definition of ratios rather
it should enable the readers to understand what the calculated ratio indicates and what the trend
for that particular ratio is. It should cover four steps:
Step # 1) Result understanding: i.e. what does the answer derived from ratio calculation
indicates? You have to critically analyze the result of calculated ratio by explaining the
relationship of numerator with that of a denominator i-e what means by 22.11 (Ratio Result).
Step #2) Trend Analysis: i.e. what are the variations in a company’s ratio results i.e. the trend
for the same company and the reasons for that change in trend?
Step #3) Comparisons: In which year the company performed better.
Step #4) Bench mark (if applicable): i.e. the comparison of ratio with the benchmark/rule of
thumb/standard of that ratio in that particular industry (as these standards vary according to the
type of industry selected for analysis e.g. Manufacturing, Banking, FMCG companies, etc).
Also give reasoning of deviation from that standard.
NOTE: You will have to interpret the calculated ratios in the way described above step wise.
Workings
You have NOT shown the working of all the ratios as per the Format Ratio Analysis document.
In various ratios, calculations are not shown, i.e. what amount is taken as numerator and
denominator respectively. How can we check the results without knowing that what amount is
taken up as numerator and denominator?
Show the working like this:

After the calculation table show how you have calculated the amounts given in numerator and
denominator (for those items that require calculations).
Current assets = Cash and balances with treasury banks +……+……
1111+2222+3333+44444=******
Current Liabilities= Bills Payable+…….+……..+…….
5555+6666+7777+8888=*****
If any amount is clearly provided in the financial statements then there is no need to show the
working for those amounts. For example if total assets amount is provided in
the financial statements no working for calculating total assets is required.
Show graphical representation like this:
2.5
2
1.5
1 Total Asset Turnover
0.5
0
Year Year Year
2008 2009 2010
You are not required to show Trend Analysis separately. Instead plot the graphs of each ratio
according to the given specimen. In this way while showing the graphs and interpreting the
ratios, you will also be performing Trend Analysis.
Read the “Essential of Ratio Analysis” document available at VULMS of your course under
the Icon DOWNLOADS after clicking COURSE WEBSITE.
Acid Test Ratio:

For year 2008: Liquid assets = current assets – inventory – prepayments
Acid Test Ratio = Liquid or Quick assets /current liabilities
= 12,665,705 / 117,340,778
= 0.10:1
Liquid assets = Current assets – investments – advances
= 132,610,662 - 30,186,168 - 89,758,789
= 12,665,705
For year 2009:
= 23,953,823 / 160,106,405
= 0.14:1
= 171,831,162 - 56,531,338 - 91,346,001
= 23,953,823
For year 2010:
= 23,156,833 / 233,169,967
= 0.09:1
= 243,282,151 – 86,418,549 – 133,706,769
=23,156,833
Acid Test Ratio recalculate

Liquid or Quick assets /Current liabilities
12,665,705 / 117,340,778 23,953,823 / 160,106,405 23,156,833 / 233,169,967
= 0.10 = 0.14 = 0.09
0.16
0.14
0.12
0.1
Ratio 0.08
0.06
0.04
0.02
0
2008 2009 2010
Years
Interpretation:
1:1 is standard ratio for Acid Test Ratio. And during all three years 2008, 2009, 2010 Acid
Test Ratio is unsatisfactory and below from standard ratio 1:1.
Working capital:
For year 2008:
Working Capital = Current Assets – Current Liabilities recalculate
= 132,610,662 - 117,340,778
= 15,269,884
For year 2009:
Working Capital = Current Assets – Current Liabilities
= 171,831,162 - 160,106,405
= 11,724,757
For year 2010:
Working Capital = Current Assets – Current Liabilities
= 243,282,151 - 233,169,967
= 10,112,184
Working Capital
Current Assets – Current Liabilities
132,610,662 - 117,340,778 171,831,162 - 160,106,405 243,282,151 - 233,169,967
= 11,724,757
= 15,269,884 = 10,112,184
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
Ratio
8,000,000
6,000,000
4,000,000
2,000,000
0
2008 2009 2010
Years
Interpretation:
Working capital provides measure of company efficiency and its short term financial condition.
During years 2008, 2009, and 2010 Faysal Bank working capital provides positive working
capital which means that it able to meet its short term obligations.
b) Leverage Ratios:
Leverage means operating a business with borrowed money. It shows the extent of long term
debt financing. It includes interest payments, equity and debt.
Times interest Earned: write down the unit of measurement with each ratio
Follow this sequence for presenting the ratio analysis:
1-Introduction
2-Formula
3-Calculation (with numerator and denominator)
4-Working
5-Graphical representation
6-Interpretation
For year 2008:

Times Interest Earned ratio = EBIT / Interest charges
= -3,152,840 / 8,454,755
= -0.37
EBIT for year 2008 = (3,152,840)
For year 2009:
= -3,689,489 / 11,967,885
= -0.30
EBIT year 2009:
Earning before interest and tax = (3,689,489)
For year 2010:
= -4,964,150 / 13,919,256
= -0.35
EBIT year 2010:
Earning before interest and tax = (4,964,150)
EBIT / Interest charges
Earnings/Profit before interest and Tax = Profit before tax + Interest expense
Interest charges + Mark up/Interest expense

-3,152,840 / 8,454,755 -3,689,489 / 11,967,885 -4,964,150 / 13,919,256
= -0.37v = -0.30 = -0.35
0.00
2008 2009 2010
-0.05
-0.10
-0.15
Ratio -0.20
-0.25
-0.30
-0.35
-0.40
Years
Interpretation:
During three year EBIT ratio shows negative figure -0.37, -0.30, and -0.35. Faysal Bank has
paid interest charges due to including of debt in its capital structure.
Debt Ratio:
Debt ratio measures percentage of creditor funds. Low ratio indicates low risk for Bank but
high leverage ratio indicates risk.
Year 2008:
Debt ratio = Total debt / Total assets
= 127,469,378 / 138,241,486
= 0.92
Total debt = Current liabilities + Long- term debt
= 117,340,778 + 10,128,600
= 127,469,378
Total assets = Current assets + Fixed assets
= 132,610,662 + 5,630,824
= 138,241,486
Year 2009:
= 168,082,674 / 180,865,413
= 0.92
= 160,106,405 + 7,976,269
= 168,082,674
= 171,831,162 + 9,034,251
= 180,865,413
Year 2010:
= 250,803,153 / 267,320,923
= 0.93
= 233,169,967 + 17,633,186
= 250,803,153
= 243,282,151 + 24,038,772
= 267,320,923
Total debt / Total assets
127,469,378 / 138,241,486 168,082,674 / 180,865,413 250,803,153 / 267,320,923
= 0.92 = 0.92 = 0.93
0.93
0.93
0.93
0.93
0.92
Ratio
0.92
0.92
0.92
0.92
0.91
2008 2009 2010
Years
Interpretation:
In total debt ratio it comes to know that Faysal Bank limited debt increased little in year 2010
from 0.92 to 0.93.
Weak interpretation, it is not enough to write the increasing/decreasing
trend. You have to also answer that what are the reasons? What are the
effects of this increase/ decrease?
Debt / Equity Ratio:
This ratio provides measure of the capital structure of the Bank. Funds comes from two ways
namely (01) Equity (02) Debt. High debt or excess of it over equity shows less equity funding
and more creditors funding and carry regular interest payments on debt.
Year 2008:
Debt / Equity Ratio = Total Debt / Total Equity
=127, 46939 / 10,135,988
= 1.25
Debt = Long term debt + Current liabilities
= 10,128,600+ 117, 340,778
= 127, 46939
Total Equity = Share capital + Reserves + Unappropriated profit
= 5,296,445 + 3,790,023 + 1, 049, 520
= 10,135,988
Year 2009:

= 168, 082, 68 / 11,336,146
= 1.48

= 7,976,269 + 160,106,405
= 168, 082, 68
Total Equity = Share capital + Reserves + Unappropriated profit
= 6,090,911 + 4,030,056 + 1,215,179
= 11,336,146
Year 2010:
= 250, 80317 / 16,614,625
= 1.51

= 17,633,186 + 233, 169, 967
= 250, 80317
Total Equity = Share capital + Reserves + Unappropriated profit +proposed shares on
amalgamation
= 7,309,094 + 7,354,688 + 1,950,843
= 16,614,625
Debt / Equity Ratio
Total Debt / Total Equity
127, 46939 / 10,135,988 168, 082, 68 / 11,336,146 250, 80317 / 16,614,625
= 1.25 = 1.48 = 1.51
1.60
1.40
1.20
1.00
Ratio 0.80
0.60
0.40
0.20
0.00
2008 2009 2010
Years
Interpretation:
During three years Debt / Equity ratio shows unfavorable. Because its total debts are exceed
total equity and increased in year 2009 and 2010.
Debt to Tangible Net worth Ratio:
Net worth = total assets – total liabilities
(When we subtract total assets from total liabilities then the result will be shareholder’s fund)
Tangible net worth =Net worth minus intangible assets
For year 2008:
Debt to Tangible Net worth Ratio = Total debt / Tangible net worth
= 127, 46939 / 10,772,108
= 1.18
Total debt = Long term debt + Current liabilities
= 10,128,600+ 117, 340,778
= 127, 46939
Tangible net worth = Total Assets - Total Liabilities
= 138,241,486 - 127,469,378
= 10,772,108
For year 2009:
= 168, 082, 68 / 12,782,739
= 1.31
= 7,976,269 + 160,106,405
= 168, 082, 68
= 180,865,413 - 168,082,674
= 12,782,739
For year 2010:
= 250, 80317 / 16,517,770
= 1.51
= 17,633,186 + 233, 169, 967
= 250, 80317
= 267,320,923 - 250,803,153
= 16,517,770
127, 46939 / 10,772,108 168, 082, 68 / 12,782,739 250, 80317 / 16,517,770
= 1.18 = 1.31 = 1.51
1.60
1.40
1.20
1.00
Ratio 0.80
0.60
0.40
0.20
0.00
2008 2009 2010
Years
Interpretation:
Debt to Tangible Net worth Ratio during three years 2008, 2009, 2010 is increased form
previous one. And year 2010 it reach maximum point 1.51.
Total Capitalization Ratio:
Total Capitalization ratio measure debt part of capital structure (Long-term debt and equity).
That supports its going operations and growth.
Year 2008:
Total Capitalization Ratio = Long-term debt / long-term debt + shareholders' equity
= 10,128,600 / 20,264,587
= 0.49
Long term debt = Sub-ordinated loans + Liabilities against assets subject to finance lease
+ Deferred tax liabilities (net) + other liabilities
= 999,600 + 4,103 + 2,483,355 + 6,641,542
= 10,128,600
Long-term debt + shareholders' equity = Long term debt + Share capital + Reserves
+ Unappropriated profit
= 10,128,600 + 5,296,445 + 3,790,023
+ 1,049,519
= 20,264,587
Year 2009:
= 7,976,269 / 19,312,415
= 0.41
= 999,200 +.NIL...+.NIL...+ 6,977,069
= 7,976,269
= 7,976,269 + 6,090,911 + 4,030,056 + 1,215,179
= 19,312,415
Year 2010:
= 17,633,186 / 34,247,811
= 0.51
= 4,595,395 + NIL + NIL + 13,037,791
= 17,633,186
= 17,633,186 + 7,309,094 + 7,354,688
+ 1,950,843
= 34,247,811
Long-term debt / long-term debt + shareholders' equity
10,128,600 / 20,264,587 7,976,269 / 19,312,415 17,633,186 / 34,247,811
= 0.49 = 0.41 = 0.51
0.60
0.50
0.40
Ratio 0.30
0.20
0.10
0.00
2008 2009 2010
Years
Interpretation:
After calculating three years Total Capitalization ratio it comes to know that FBL uses little
long term debt in its total capital structure.
c) Profitability Ratios:
This ratio provides measurability of firm earning. And its long term profitability necessary in
order to survive for long term in competitive market. These ratios measures profit figure with
firm size, its employed assets, and sales level. It gives snapshot of firm financial performance.
Net Profit Margin:
It measures actual net profit after the deduction of all cost incurred. It gives
percentage of turnover which is presented by the net profit. Net profit means net profit after
interest and tax. Higher ratio favorable and lower indicates poor earning of firm.
For year 2008:
Net Profit margin = Net Profit / Sales x 100
= 1,114,952 / 13, 404, 13
= 8%
Net profit for year 2008 = 1,114,952
Bank is service provider so its (Sales) Interest earned during year is considered = 13,404,132
For year 2009:
= 1,200,159 / 16,957,875
= 7%
Interest earned (Sales) = 16,957,875
For year 2010:
= 1,190,329 / 19,710,460
= 6%
Interest earned (Sales) = 19,710,460
1,114,952 / 13, 404, 13 1,200,159 / 16,957,875 1,190,329 / 19,710,460
= 8% = 7% = 6%
9%
8%
7%
6%
5%
Ratio
4%
3%
2%
1%
0%
2008 2009 2010
Years
Interpretation:
Net profit margin of FBL continuously downward form 8% to 7% and then 6% and this is not
a good sign for Bank. Because it’s net profit margin reduced in these years.
Weak interpretation, it is not enough to write the increasing/decreasing trend. You have to
also answer that what are the reasons? What are the effects of this increase/ decrease?
Return on Assets:
Return on assets measures firm profitability relative to its assets. Higher percentage return on
assets shows efficient management in using its assets.
For the year ended December 31, 2008:
Return on Assets = Profit after taxation / Average Total Assets *100
= 1,114,952 / 69,120,743 *100
= 1.61%
Profit after taxation = 1,114,952
Average Total Assets = Total assets / 2
= 138,241,486 / 2
= 69,120,743
For year 2009:
= 1,200,159 / 90,432,707 *100
= 1.32%
= 180,865,413 / 2
= 90,432,707
For year 2010:
= 1,190,329 / 133,660,461.5 *100
= 0.89%
= 267,320,923 / 2
= 133,660,461.5
1,114,952 / 69,120,743 *100 1,200,159 / 90,432,707 *100 1,190,329 / 133,660,461.5 *100
= 1.61% = 1.32% = 0.89%
1.80%
1.60%
1.40%
1.20%
1.00%
Ratio
0.80%
0.60%
0.40%
0.20%
0.00%
2008 2009 2010
Years
Interpretation:
During year 2008 return on assets gives maximum value than other two years. And after year
2008 return on assets tending toward decline as in year 2009 it is 1.32% and then in year
2010 0.89%. So in year 2009 and 2010 investment in fixed assets is not worthy.
DuPont Return on Assets: recalculate
ROA Du Pont = [(Net income / Sales) x (Sales / Total Assets)] *100
OR
ROA Du Pont = net profit margin * total asset turnover
Year 2008:
DuPont Return on Assets = Profit after taxation/Total Assets * 100
= 1,114,952 / 138,241,486 *100
= 0.80%
= 132,610,662 + 5,630,824
= 138,241,486
Year 2009:
= 1,200,159 / 180,865,413 *100
= 0.67%

= 171,831,162 + 9,034,251
= 180,865,413
Year 2010:
= 1,190,329 / 267,320,923 *100
= 0.45%
= 243,282,151 + 24,038,772
= 267,320,923
DuPont Return on Assets
Profit after taxation/Total Assets * 100
1,114,952 / 138,241,486 *100 1,200,159 / 180,865,413 *100 1,190,329 / 267,320,923 *100
= 0.80% = 0.67% = 0.45%
0.90%
0.80%
0.70%
0.60%
0.50%
Ratio
0.40%
0.30%
0.20%
0.10%
0.00%
2008 2009 2010
Years
Interpretation:
All three years DuPont return on assets shows unfavorable movement. These are unsatisfied
and bad sign for Bank. Its return in 2008 is 0.80% but in coming two years it goes down 0.67%
and 0.45%.
Operating Income Margin:

Operating income margin (Operating earning or operating profit) is calculated after deducting
all selling and administration expenses from Gross profit.
For year 2008:
Operating Income Margin = Operating Income / Net Sales*100
= 1,691,534 / 13,404,132 *100
= 12.7%
* Selling expenses is not available so only administrative expenses are subtracted from Gross
profit.
Operating income = Gross profit – Administrative expenses
= 4,949,377 - 3,257,843
= 1,691,534
Interest earned (net sales) = 13,404,132
For year 2009:
= 705,904 / 16,957,875 *100
= 4.16%
= 4,989,990 - 4,284,086
= 705,904
For year 2010:
= -852,868 / 19,710,460 *100
= -4.32 %
= 5,791,204 - 6,644,072
= -852,868
Operating Income Margin

Operating Income / Net Sales*100
1,691,534 / 13,404,132 *100 705,904 / 16,957,875 *100 -852,868 / 19,710,460 *100
= 12.7% = 4.16% = -4.32 %
14%
12%
10%
8%
6%
Ratio 4%
2%
0%
-2% 2008 2009 2010
-4%
-6%
Years
Interpretation:
Operating income margin is decreased in three years 2008, 2009, 2010. Maximum return
which get in year 2008 12.7% is satisfactory for the Bank. But it bad sign for Bank when
coming two years Operating income margin is going to decline.
Return on Operating Assets:
Operating assets includes Cash and balances with treasury banks, Balances with other banks
& Operating fixed assets.
Dear student, All the assets of the business which take part in the activities of business can be
operating assets, you can not come to know that which assets are operating and which are not
unless and until the management of the organization identifies, but you can not take the figure
of total assets as operating. For the ratio calculation of manufacturing industry operating
assets can be calculated as follow:
Operating Assets for Banks = Total assets – (Investments + deferred assets + other assets)
Year 2008:
Return on Operating Assets = Profit after Taxation/ Operating assets*100
= 1,114,952 / 12,451,282 *100
= 8.96%
Operating assets = Cash and balances with treasury banks + Balances with other banks
+ Operating fixed assets
= 8,927,524 + 876,780 + 2,646,978
= 12,451,282
Year 2009:
= 1,200,159 / 11,723,614 *100
= 10.23%
+ Operating fixed assets
= 8,427,202 + 508,795 + 2,787,617
= 11,723,614
Year 2010:
= 1,190,329 / 23,156,833 *100
= 5.14%
= 17,428,924 + 5,727,909
= 23,156,833
1,114,952 / 12,451,282 *100 1,200,159 / 11,723,614 *100 1,190,329 / 23,156,833 *100
= 8.96% = 10.23% = 5.14%
12.00%
10.00%
8.00%
Ratio 6.00%
4.00%
2.00%
0.00%
2008 2009 2010
Years
Interpretation:
In year 2008 return on operating assets was 8.96%. And after that in year 2009 it moves
favorable 10.23%. But in year 2010 it declines downward than previous two years and show
5.14% return on operating assets.
Return on Total Equity:
This is important measures the net profit earned relative to utilizing each dollar of equity. Two
items appear for this calculation first Net profit and Total equity. It measures that how much
the shareholders earned for their investment in the firm or company. Higher ratio indicated
efficient management of shareholders fund and grater return on their investment.
For year 2008:
Return on Total Equity = Profit after taxation / Total Equity*100
= 1,114,952 / 10,135,987 *100
= 11%
Profit after taxation (Net profit) = 1,114,952
Total equity = Share capital +Reserves +Unappropriated profit
= 5,296,445 + 3,790,023 + 1,049,519
= 10,135,987
For year 2009:
= 1,200,159 / 11,336,146 *100
= 10.6%
= 6,090,911 + 4,030,056 + 1,215,179
= 11,336,146
For year 2010:
= 1,190,329 / 16,614,625 *100
= 7.17%
= 7,309,094 + 7,354,688 + 1,950,843
= 16,614,625
Return on Total Equity
Profit after taxation / Total Equity*100
1,114,952 / 10,135,987 *100 1,200,159 / 11,336,146 *100 1,190,329 / 16,614,625 *100
= 11% =10.6% = 7.17%
12.00%
10.00%
8.00%
Ratio 6.00%
4.00%
2.00%
0.00%
2008 2009 2010
Years
Interpretation:
It clearly from above calculations that return on total equity is decreasing downward. In year
2008 it is 11% which is favorable. But after that in year 2009 it reach 10.6% and in next year
2010 it decline more 7.17%. And this steadily downward return on total equity is not good sign.
Gross Profit Margin:
Gross profit margin ratio measures financial health of company. It is calculated by dividing
Gross profit over Net sales and multiplying answer with 100. It provides main source for future
expenses and savings. High percentage return is satisfied result for survival and low gross profit
margin unfavorable for company (Bank).
Year 2008:
Gross Profit Margin =Gross Profit / Net sale *100
= 4,949,377 / 13,404,132 *100
= 36.92%
Gross profit:
Mark-up / return / interest earned = 13,404,132
(Less) Mark-up / return / interest expensed = 8,454,755
Interest income (Gross profit) = 4,949,377
Net sales (Interest earned) during year 2008 = 13,404,132
Year 2009:
= 4,989,990 / 16,957,875 *100
= 29.42%
Gross profit:
Year 2010:
= 5,791,204 / 19,710,460 *100
= 29.38%
Gross profit:


Gross Profit Margin
Gross Profit / Net sale *100
4,949,377 / 13,404,132 *100 4,989,990 / 16,957,875 *100 5,791,204 / 19,710,460 *100
=36.92% =29.42% =29.38%
40.00%
35.00%
30.00%
25.00%
Ratio 20.00%
15.00%
10.00%
5.00%
0.00%
2008 2009 2010
Years
Interpretation:
In year 2008 Gross profit margin is at maximum point 36.92%. Which is a good sign and
favorable for Bank. But in coming two years it decreases.
d) Activity Ratios:
Activity ratios measure firm's ability to convert different accounts within their balance sheets
into cash. This ratio measures efficiency of assets management.
Total Assets Turnover:
Total assets turnover ratio is calculating by dividing sales by assets. The higher the turnover
the favorable it is. This measures efficiency in using assets for generating sales.
Year 2008:
Total Assets Turnover = Total Sales / Total Assets
= 13,404,132 /138,241,486
= 0.09
Total sales = 13,404,132
Total Assets = Current assets + Fixed assets
= 132,610,662 + 5,630,824
= 138,241,486
Year 2009:
= 16,957,875 / 180,865,413
= 0.09
= 171,831,162 + 9,034,251
= 180,865,413
Year 2010:
= 19,710,460 / 267,320,923
= 0.07
= 243,282,151 + 24,038,772
= 267,320,923
13,404,132 / 138,241,486 16,957,875 / 180,865,413 19,710,460 / 267,320,923
= 0.09 = 0.07
= 0.09
0.1
0.09
0.08
0.07
0.06
Ratio 0.05
0.04
0.03
0.02
0.01
0
2008 2009 2010
Years
Interpretation:
In year 2010 ratio is unsatisfactory. In last two years 2008, and year 2009 figure is 0.09. And
in year 2010 it decrease.
Fixed Assets Turnover:

Amount of fixed assets is given in the balance sheet as fixed assets or operating fixed
assets.
For year 2008:
Fixed Assets Turnover = Total sales/Fixed assets
=13,404,132 / 5,630,824
= 2.39
Fixed assets = 5,630,824
For year 2009:

= 16,957,875 / 9,034,251
= 1.88
For year 2010:
= 19,710,460 / 24,038,772
= 0.81
Fixed Assets Turnover

Total sales/Fixed assets
13,404,132 / 5,630,824 16,957,875 / 9,034,251 19,710,460 / 24,038,772
= 2.39 = 1.88 = 0.81
3.00
2.50
2.00
Ratio 1.50
1.00
0.50
0.00
2008 2009 2010
Years
Interpretation:
Fixed Assets turnover ratio is satisfactory in year 2008 figure 2.39. Year 2009, and year 2010
ratio is un-satisfied.
e) Market Ratios:
Market ratios are commonly used by the investors to assess the performance of a business as
an investment. It also measures investor response to owning a company stock and also the cost
of issuing.
Dividend per share:

Year 2008:
Dividend per share = Total amount of Dividend/ Number of outstanding shares
= 870,266 / 529,644
= 1.64
Year 2009:
= 0 / 609,091 =0
In year 2009 no dividend was paid.
Year 2010:
= 645000 / 7,309,094
= 0.08
Dividend per share
Total amount of Dividend/ Number of outstanding shares
870,266 / 529,644 0 / 609,091 645000 / 7,309,094
= 1.64 =0 = 0.08
1.80
1.60
1.40
1.20
1.00
Ratio
0.80
0.60
0.40
0.20
0.00
2008 2009 2010
Years
Interpretation:
In year 2008 DPS ratio gives favorable figure Rs. 1.64.
Earning per Share:

Year 2008:
Earning Per Share = Profit after Taxation/ Number of Shares
= 1,114,952 / 5,296,445
= 0.21
Number of Shares = 5,296,445
Year 2009:
= 1,200,159 / 6,090,911
= 0.19
Year 2010:
= 1,190,329 / 7,309,094
= 0.17
Earning Per Share
Profit after Taxation/ Number of Shares
1,114,952 / 5,296,445 1,200,159 / 6,090,911 1,190,329 / 7,309,094
=0.21 =0.19 =0.17 Commented [m2]: Recalculate , wrong results
0.25
0.20
0.15
Ratio
0.10
0.05
0.00
2008 2009 2010
Years
Interpretation:
Earning per share ratio measures company profitability. And also helpful in determining share
price. In three years measure it shows unsatisfactory figures.
Price/Earning Ratio:
For year 2008:
Price / Earning Ratio = Stock Price per Share/ Earning Per Share
= 11.51 / 0.21
= 54.9
For year 2009:
=17.53 / 0.19
= 92.2
For year 2010:
= 15.59 / 0.17
= 91.8
Price / Earning Ratio
Stock Price per Share/ Earning Per Share
11.51 / 0.21 17.53 / 0.19 15.59 / 0.17
=54.9 =92.2
= 91.8
100.00
90.00
80.00
70.00
60.00
Ratio 50.00
40.00
30.00
20.00
10.00
0.00
2008 2009 2010
Years
Interpretation:
Price / Earning ratio is satisfied during three years. And in year 2010 ratio it is slightly decline
than ratio of year 2009.
Review of Descriptive information Faysal bank limited:
Descriptive information is gained form Faysal bank limited annual report, Balance sheet, Profit
& Loss Account, Cash flow statement. Faysal bank limited financial statements are prepared
according to accounting standards (International accounting standard adopted in Pakistan).
Also these statements are prepared according to instructions of Banking Companies Ordinance
1962, and Directives issued by the State Bank of Pakistan.
In Balance sheet Dividend approval and appropriation to reserve are recoded as liability in the
year of their approval. The bank is required to transfer twenty percent of its profit each year to
the statutory reserve fund until the amount equal to the Paid up capital of the Faysal Bank
Limited.
I want to describe it that Gross profit in year 2010 decline from previous year which is 29.38%.
Net profit also decrease which is 6%. Dividend per share is 0.08 which is more than year 2009.
In year 2010 Working capital decrease from previous year which is 10,112,184. And
Tangible net worth is increased than previous year which is 16,517,770. Balance sheet on
December 31, 2010 shows share capital Rs. 7,309,094 which is favorable than previous two
years 2008, 2009.
Faysal Bank paid up capital in year 2010 most satisfied than two previous years. This helps
him in maintaining its liquidity. Share capital help bank in mobilizing is deposits, provide
attractive return deposits facilities, and update its technology. All these endeavors affect its
profitability.
Audit is conducted in accordance with the auditing standards as applicable in Pakistan. With
the help of these standards audit perform to obtain assurance about whether the financial are
free from any error. Faysal Bank Limited Balance sheet, Profit and Loss Account, Statement
of comprehensive income, cash flow statement, statement of changes in equity are audited for
their reasonable assurance about free of any material misstatement.
In their opinion, the financial statements present fairly the financial position of Faysal Bank
Limited, and the results of their operations, their comprehensive loss, and their cash flows,
changes in equity comply with the approved accounting standards as applicable in Pakistan. Commented [m3]: Irrelevant, you are not the auditor of faysal
bank.
(1). Trend Analysis:

In trend analysis I compare all financial ratios which required in my Internship report.
Financial Ratios helpful in comparing Bank financial position whether it is favorable or
deteriorate or un-changed in specific period. And trend analysis ratio tells its position in terms
of upward, downward, or remains constant.
Trend Analysis
Faysal Bank Limited
Years ended 2008, 2009 & 2010
2008 2009 2010 Trend Analysis
Performance Area
a) Liquidity Ratios
Current Ratio Unfavorable
1.13 1.07 1.04 (Standard ratio
2:1)
Acid Test Ratio Low liquidity
ratio in all the
0.10 0.14 0.09 years
(Standard ratio
1:1)
Working capital Current assets are
15,269,884 11,724,757 10,112,184 sufficient to meet

current liabilities
b) Leverage Ratios
Time Interest Earned -0.37 -0.30 -0.35 Negative ratio in

all three years
Debt Ratio Leverage
0.92 0.92 0.93 increase in year
2010
Debt / Equity Ratio FBL debt
1.51
1.25 1.48 increase in year
2010
Debt to Tangible Net In 2010 FBL has
worth Ratio 1.18 1.31 1.51 more debt in its
capital structure
Total Capitalization Ratio In 2010 Ratio is
increase
0.49 0.41 0.51
c) Profitability Ratios
Profit is
Net Profit Margin 8% 7% 6% decreasing
Return on Assets 0.89% Minimum ROA
1.61% 1.32%
in year 2010
DuPont Return on Assets Continuously
0.80% 0.67% 0.45%
decrease in three
years
Operating Income Margin Decrease and in
12.7% 4.16% (4.32) %
year 2010
negative
Return on Operating In year 2010
Assets 8.96% 10.23% 5.14% return is decrease
Return on Total Equity Return on total

equity is
11% 10.6% 7.17%
Decreasing
continuously
Gross Profit Margin Gross profit is
36.92% 29.42% 29.38% decrease in year
2010
d) Activity Ratios
Total Assets Turnover Minimum in year
0.09 0.09 0.07
2010
Fixed Assets Turnover Favorable in year
2008, and
2.39 1.88 0.81
minimum in year
2010
e) Market Ratios
Dividend per share In Year 2008
satisfy but in next
1.64 0 0.08
two years
unfavorable
Earning per Share Unfavorable
0.21 0.19 0.17 earnings during
three years
Price/Earning Ratio Satisfy in year
54.9 92.2 91.8
2009
Not required follow the format. Formatted: Tab stops: 0.85", Left
(13). Future Prospects of FBL

Faysal bank launched its branches on domestic place, in order to provide basic consumer
banking services. It boosts its investment in HRM in order to manage new opportunities which
generate income. In order to get consumer market share it introduced finance products for its
consumers. In order to get new customers attention
Faysal Bank Limited plan to introduce new short term product in order to acquire deposits e.g.
FBL plan to provide profit rate of 15% to 16%, well above the other banks offer rate. FBL also
devise policies for introducing of home finance for home appliances or for construction of
home. And also Toba branch plan to introduce car finance facility to its customers.
14. Conclusion
In conclusion on the result of financial analysis and after conducting SWOT analysis it comes
to known that FBL has enough current assets which maintain its liquidity. It has a sound Commented [m4]: You did not conduct the swot analysis of
FBL then how it comes in conclusions?
financial position.
Conclusion about FBL Toba Tek Singh branch I observe during my internship program is that
staff is not complete in this branch. So on few employees work overload which discourage their
virtuous. I also observe that mostly branch ATM machine not work properly and clients face
inconvenience.
Moreover Bank Alfalah Islamic and Meezan Bank (Premier Islamic Bank) located in same
street of banking. These both introduce attractive deposit interest rates and in turn FBL face
stiff competition and challenges.
FBL Toba branch has sophisticated software installed. They buy it at cost of Rs. 8 million. I
observe during my internship period that all Deposits, Payments, Western union recording,
assigning numbers to files, and many other miscellaneous works execute through this system.
FBL provides Debit card, finance schemes, deposits facility like Faysal Sahulat Current
Account, Faysal Savings Account, and Faysal Izafa Term Deposit Account. It also provides
assistance to agriculture sector in form of Faysal Kisan Khushal Scheme. Through it bank
provide loan facility up to 80% farmer charges for agriculture purposes.
Faysal bank takes some steps to provide more products at attractive mark up to its customers
and anticipate in economic development of Pakistan.
CONCLUSIONS
Write all major findings based on your ratio analysis and learning experience. But as a
FINANCIAL ANALYST, put more focus on your ratio analysis. Mention all ratios those are
not up to standard and those are good ones. Also mention any other deficiency or strength
you found based on your ratio analysis and learning experience.
RECOMMENDATIONS
As a Financial Analyst provide comprehensive recommendations for improving the current
position of your selected organization based on your conclusions, ratio analysis and learning
experience. What your selected organization can do for improving their financial position?
Put more focus on how these companies can improve their various ratios and financial
position.
Make sure your recommendations must be according to your area of specialization (i-e
finance) and based on your ratio analysis and training program. Not just General
recommendation.
NOTE: In Conclusion section, you are required to just mention the results of those ratios
briefly which you think are important. For example you found that Net Profit Margin of your
selected company is not good. You mention this fact in your CONCLUSION section.
Similarly other important ratio results showing any strength or weakness can be mentioned.
Now in Recommendations section, you as a Financial Analyst will provide some

recommendations showing how this net profit margin can be increased. What steps the
organization should take to correct the situation.
15. Recommendations for Improvement

Now I want to give some suggestion and recommendations for FBL in the light of ratio
analysis and my own observation during internship program.
Management training of employees:
If professional management training is provided to employees then it explores their internal
capabilities and skills. After management training employees capable to make critical decisions
vary due to changing in economic conditions of country.
Heavy promotion activities:
FBL must take part in heavy advertisement as the people become aware of the bank. FBL Toba
branch has lack of awareness in the people and also low trust due to un-productive advertising
campaign.
Increase customers Base:
There is lack of customers’ volume in FBL. It has the option to increase its customers’ through
efficient marketing system. Bank should develop healthy relations with customers.
Home financing:
FBL Toba Tek Singh branch not yet issue loan for home appliances as well as for construction
of home. It must issue home financing to its clients at early steps. Because in Toba branch this
facility not provided by bank but in other banks like UBL provide home loan facility.
Co-operative environment:
I observe during internship that some employees have rude behavior with customers. So I think
that it necessary that friendly environment of customers dealing is established in FBL Toba
branch. Irrespective of their transaction volume with bank it necessary that seats given to
customers and also give them respect. They feel cooperative environment and their importance
to the bank.
New Technology:
Faysal bank faces competition due to establishment of other banks in place. So it necessary that
it invest in new technology in order to provide fast services less costly than competitors.
16. Reference & Sources used
REFERENCE & SOURCES USED
Consult APA format for referencing available on VULMS of your course under the icon
DOWLOADS after clicking COURSE WEBSITE at VULMS. Also consult lecture no. 45 of
STA 630 for further guidance.
General Form(BOOK)
Author, A. A. (Year). Title of work. Location: Publisher.
One Author
Alexie, S. (1992). The business of fancydancing: Stories and poems.Brooklyn, NY:
Hang Loose Press.
General Form (Online Resources)

Author, A. A. (Year). Title of work. Retrieved from web address
Online Report with No Author Identified and No Date
GVU's 10th WWW user survey. (n.d.). Retrieved from http://www

.cc.gatech.edu/user_surveys/survey-1998-10/
ANNEXES
Also attach scanned copies of the financial statements of all your selected companies OR
provide the URL address of the
website from where you have downloaded these financial statements.
Web Sites:
www.faysalbank.com
www.google.com
www.Ask.com
Oral Data:
Valuable information was provided by Mr. Shafique (Operational Manager) and Mr. Bilal
Amin (B.S.O).
Written Data:
Annual Report
Brochures
17. Annexes:
URL: www.faysalbank.com

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Executive MBA Business Report on

FAYSAL BANK LIMITED

SUPERVISED BY: SIR HAMMAD RAZA SAHOO

SUBMITTED BY: SH, SULEMAN GHAFFAR

DEPARTMENT OF BUSINESS ADMINISTRATION

(a) Brief history

Categories of No. of Share Shares Held Percentage %

(d) Product lines

2. Faysal Savings Account:

Faysal Car Finance:

f. Brief Introduction of all the Departments

g. Comments on the organizational structure

10. Plan of Internship Program:

a. A brief introduction of the branch (FBL) Where I did my Internship:

b. Starting and Ending dates of my Internship:

11. Training Program:

 Detailed description of the tasks assigned by me:

a. Individual accounts requirement (documents):

b. Partnership (documents required):

c. Public / Private Limited Company:

Faysal khushaal Kisan Scheme:

Consumer financing (Personal finance):

SME Financing (Small & Medium Enterprise Financing):

12. Ratio analysis:

a). Liquidity ratios:

For year 2010 (Rupees in ‘000’):

Current ratio = Current Assets / Current Liabilities

Guidelines for Interpretation of Ratios

What does interpretation of ratios mean?

Step #3) Comparisons: In which year the company performed better.

Show the working like this:

Show graphical representation like this:

Acid Test Ratio:

Acid Test Ratio recalculate

Follow this sequence for presenting the ratio analysis:

For year 2008:

Interest charges + Mark up/Interest expense

Debt / Equity Ratio = Total Debt / Total Equity

Debt = Long term debt + Current liabilities

Debt = Long term debt + Current liabilities

Profit after taxation = 1,200,159

Operating Income Margin:

Operating Income Margin

Profit after taxation = 1,114,952

(Less) Mark-up / return / interest expensed = 13,919,256

Net sales (Interest earned) during year 2010 = 19,710,460

Fixed Assets Turnover:

For year 2009:

Fixed Assets Turnover

Dividend per share:

Earning per Share:

(1). Trend Analysis:

15,269,884 11,724,757 10,112,184 sufficient to meet

Time Interest Earned -0.37 -0.30 -0.35 Negative ratio in

Return on Total Equity Return on total

(13). Future Prospects of FBL

Now in Recommendations section, you as a Financial Analyst will provide some

15. Recommendations for Improvement

General Form (Online Resources)

Online Report with No Author Identified and No Date

GVU's 10th WWW user survey. (n.d.). Retrieved from http://www

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