Financial ratios - Assignment Example

Financial Ratio Analysis Number: Lecturer: Financial Ratio Analysis Doha Bank Q.S.C. a) Liquidity Ratios i) Current asset ratio Current asset ratio = current assets/current liabilities = 65,428,874,000/52,818,101,000 = 1.24 or 124%ii) Acid test (quick) ratioAcid test = (cash + Due from other banks + investment securities)/ current liabilities = (3,435,761,000 + 9,180,420,000 + 11,703,577,000)/52,818,101,000 = 24,319,758,000/52,818,101,000 = 0.

46 or 46%iii) Cash ratio Cash ratio = Cash Equivalents + Marketable Securities Current Liabilities = 24,319,758,000 52,818,101,000 = 0.46 or 46%b) Financial leverage ratiosi) Debt ratio Debt ratio= Total Debt/Total Assets = 55,698,921,000/66,969,824,000 = 0.832 or 83.2%ii) Debt-to-equity ratio Debt-to-equity ratio= Total Debt/ Total Equity = 55,698,921,000/11,270,903,000 = 4.

942 or 494.2%c) Efficiency ratiosi) Cash turnoverCash turnover = Sales Cash = 2,394,462,000 3,435,761,000 = 0.7 or 70%ii) Total asset turnover Total asset turnover = Sales Total assets = 2,394,462,000 66,969,824,000 = 0.036 or 3.6%iii) Fixed asset turnover Fixed asset turnover = Sales Net Plant & Equipment = 2,394,462,000 759,471,000 = 3.

153 or 315.3% iv) Receivables turnover Receivables turnover = Sales Accounts receivables = 2,394,462,000 9,180,420,000 = 0.261 or 26.1% d) Profitability ratiosi) Net profit marginNet profit margin = Net Income Sales = 1,312,652,000 2,394,462,000 = 0.

55 or 55%ii) Return on assetsReturn on assets = Net Income Assets = 1,312,652,000 66,969,824,000 = 0.0196 or 1.96%iii) Operating income marginOperating income margin = Operating Income (EBIT) Sales = 1,317,759,000 2,394,462,000 = 0.

55 or 55%iv) Return on investmentReturn on investment = Net Income Long-term Liabilities + Equity = 1,312,652,000 14,151,723,000 = 0.093 or 9.3% v) Return on equityReturn on equity = Net Income Equity = 1,312,652,000 11,270,903,000 = 0.

1165 or 11.65%vi) Gross profit margin Gross profit margin = Gross Profit Sales = 1,822,251,000 2,394,462,000 = 0.761 or 76.1%e) Market value ratiosi) Price earnings ratio = Market price per share Earnings per share = 58.8 5.29 = 11.1 times ii) Market-to-Book ratio Market-to-Book ratio = market price per share Book value per share =58.

8 43.7 = 1.35 times Commercial Bank of Qatar (CBQ)a) Liquidity Ratiosi) Current asset ratioCurrent asset ratio = current assets/current liabilities = 103,649,354,000/85,778,808,000 = 1.21 or 121%ii) Acid test (quick) ratioAcid test = cash + Due from other banks + investment securities/ current liabilities = 36,786,810,000/85,778,808,000 = 0.

43 or 43%iii) Cash ratio Cash ratio = Cash Equivalents + Marketable Securities Current Liabilities = 29,884,263,000 85,778,808,000 = 0.35 or 35%b) Financial leverage ratiosi) Debt ratio Debt ratio= Total Debt/Total Assets = 96,556,770,000/113,111,865,000 = 0.854 or 85.4%ii) Debt-to-equity ratioDebt-to-equity ratio= Total Debt/ Total Equity = 96,556,770,000/16,555,095,000 =5.

83 or 583%c) Efficiency ratiosi) Cash turnoverCash turnover = Sales Cash = 3,607,146,000 6,902,547,000 = 0.52 timesii) Total asset turnoverTotal asset turnover = Sales Total assets = 3,607,146,000 113,111,865,000 = 0.032 timesiii) Fixed asset turnoverFixed asset turnover = Sales Net Plant & Equipment = 3,607,146,000 1,283,186,000 = 2.

81 times or 281% iv) Receivables turnover Receivables turnover = Sales Accounts receivables = 3,607,146,000 15,177,969,000 = 0.24 timesd) Profitability ratiosi) Net profit marginNet profit margin = Net Income Sales = 1,605,378,000 3,607,146,000 = 0.445 or 44.5% ii) Return on assetsReturn on assets = Net Income Assets = 1,605,378,000 113,111,865,000 = 0.0142 or 1.42% iii) Operating income marginOperating income margin = Operating Income (EBIT) Sales = 1,607,758,000 3,607,146,000 = 0.446 or 44.6% iv) Return on investmentReturn on investment = Net Income Long-term Liabilities + Equity = 1,605,378,000 27,333,057,000 = 0.0587 or 5.87% v) Return on equityReturn on equity = Net Income Equity = 1,605,378,000 16,555,095,000 = 0.097 or 9.7%vi) Gross profit marginGross profit margin = Gross Profit Sales = 2,188,359,000 3,607,146,000 = 0.

61 or 61%e) Market value ratiosi) Price earnings ratio = Market price per share Earnings per share = 70.5 6.48 = 10.88 timesii) Market-to-Book ratio Market-to-Book ratio = market price per share Book value per share = 70.5 56.

4 = 1.25 times Comparisons between the two banks Liquidity RatiosDoha BankCommercial Bank of QatarAssessmentCurrent asset ratio124%121%Doha Bank has more liquid asset than CBQAcid test ratio46%43%Doha Bank has more liquid asset than CBQCash ratio46%35%Doha Bank has more liquid asset than CBQFinancial leverage ratiosDoha BankCommercial Bank of QatarAssessmentDebt ratio83.2%85.4%CBQ has more debts than Doha BankDebt-to-equity ratio494.

2%583%CBQ has more debts than Doha BankEfficiency ratiosDoha BankCommercial Bank of QatarAssessmentCash turnover70%52%Doha Bank is more efficient than CBQTotal asset turnover3.6%3.2%Doha Bank is more efficient than CBQFixed asset turnover315.3%281%Doha Bank is more efficient than CBQReceivables turnover 26.1%24%Doha Bank is more efficient than CBQProfitability ratiosDoha BankCommercial Bank of QatarAssessmentNet profit margin55%44.5%Doha Bank is more profitable than CBQReturn on assets1.96%1.

42%Doha Bank has better return on assets than CBQOperating income margin55%44.6%Doha Bank is more profitable than CBQReturn on investment9.3%5.87%Doha Bank has better returns on investment than CBQReturn on equity11.65%9.7%Doha Bank has better returns on equity than CBQGross profit margin76.1%61%Doha Bank is more profitable than CBQMarket value ratiosDoha BankCommercial Bank of QatarAssessmentPrice earnings ratio11.110.88Doha Bank is better in value than CBQMarket-to-Book ratio1.351.25Doha Bank is better in value than CBQWorks CitedCommercial Bank of Qatar.

(31 December 2013). “Consolidated financial statements 31 December 2013.” Qatar Stock Exchange. Retrieved 14 May 2015 from http://www.qe.com.qa/pps/qe/qe+english+portal/Pages/Company+Profile+Pages/Financial+Statements+Details?com.tibco.ps.pagesvc.action=updateRenderState&rp.currentDocumentID=3fbacc09_14425b1d033_-3ea07f000001&rp.attachmentPropertyName=Attachment&rp.revisionNumber=1&com.tibco.ps.pagesvc.mode=resource&rp.redirectPage=-53343f7a_1279673d2a9_-78b60a000136&com.tibco.ps.pagesvc.

targetPage=-53343f7a_1279673d2a9_-78ad0a000136Doha Bank Q.S.C. (31 December 2013). “Consolidated financial statements for the year ended 31 December 2013.” Qatar Stock Exchange. Retrieved on 14 May 2015 from http://www.qe.com.qa/pps/qe/qe+english+portal/Pages/Company+Profile+Pages/Financial+Statements+Details?com.tibco.ps.pagesvc.action=updateRenderState&rp.currentDocumentID=2acdba71_143b91c7213_19d57f000001&rp.attachmentPropertyName=Attachment&rp.revisionNumber=2&com.tibco.ps.pagesvc.mode=resource&rp.

redirectPage=-53343f7a_1279673d2a9_-78b60a000136&com.tibco.ps.pagesvc.targetPage=-53343f7a_1279673d2a9_-78ad0a000136