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Introduction to Topic: -

In Financial Management Strategy, we will assess the complex decision


making necessary at the higher levels of management, including evaluating
and setting up reward systems for subordinates and other personnel,
evaluating expansion opportunities, mergers and acquisitions, spin-offs and
sales of existing assets, and making decisions on complex investment
opportunities and managing risk. We will develop the financial know-how
necessary for senior management to skillfully guide any organization toward
success.

‘OR’

The identification of the possible strategies capable of maximizing an


organization's net present value, the allocation of scarce capital resources
among the competing opportunities, and the implementation and monitoring
of the chosen strategy so as to achieve stated objectives.

‘OR’

Nobody can really guarantee the future. The best we can do is to size up the

chances, calculate the risks involved, estimate our ability to deal with them

and make our plans with confidence. – HENRY FORD II

Review of Literature: -
Financial Management Strategy involves following important topics.

1. Acquiring Capital Need,

2. Developing Projected Financial Statements

3. Preparing Financial Budgets

4. Evaluation of Worth of Business

Capital can be raised with short-term debt, long-term debt, preferred stock or

common stock. The selection depends upon the cost of debt. Company may

select one source or the combination of sources to raise its capital.

Projected Financial Statements are prepared to calculate the impact of

various managerial decisions on company’s financial position.

A Financial Budget is a document that details how funds will be obtained

and spent for a specified period of time. Annual budgets are most common,

although the period of time for a budget can range from one day to more

than 10 years.

Different type of Ratios can be used to evaluate the worth of business. Such

as:
• Profitability Ratio

• Investments to Total Assets Ratio

• Operating Profit Ratio

• Return on Equity Ratio, etc.

Introduction to the Organization: -

Bank Alfalah Limited was incorporate on June 21st, 1997 as a public limited
company under the Companies Ordinance 1984. Its banking operations
commenced from November 1st, 1997. The bank is engaged in commercial
banking and related services as defined in the Banking companies
ordinance, 1962. The Bank is currently operating through 61 branches in
more than 21 cities, with the registered office at B.A.Building, Chundrigar,
Karachi.

VISION

“To be the premier organizations operating locally


and internationally that provided the complete range
of financial services to all segments under one roof”
MISSION
“To develop and deliver the most innovative products, manage

customers experience, deliver quality service that contributes to

brand strength, establishes a competitive advantage and enhances

profitability, thus providing value to the stakeholders of the bank”

Board of Directors:-

H.E. Sheikh Hamdan Bin Mubarak

Mr. Mohammad Saleem Akhtar

Mr. Abdulla Khalil Al Mutawa

Mr.Khalid Mana Saeed Al Otaiba

Mr. Abdulla hawalileel AL-Mansoor

Mr. Ikram Ul-Majeed Sehgal

Interpretation of Balance sheet

Assets
a) The liquid assets such as Cash & balance with Treasury Banks

decreased in 2002. The balance with other banks decreased in 2002

i.e. 0.35 %as compare to 2001 which is 2.69%.

b) The portion of investment in total assets is 37.89% in 2002 and

28.4% in 2001. this is not much favorable trend because

management should advance more and invest less.

c) Portion of advances in percentage of total asset was decreased

43.45% as compare to 2001 which was 47.71%.

d) Portion of fixed asset decrease in 2002 as compare to 2001.

e) Lending of Financial Institutions decrease in 2002 that is 0.71% as

compare to 2001 that was 4.23%. This shows that management

trend of giving loan to financial institution is decreases.

Interpretation of income statement


 The markup income decrease in 2002. This shows that banks earn

lesser in markup income as compare to 2001.

 Non markup income in 2002 is 11.73% where as in 2001 it is

10.02%. This shows non markup income is increase in 2002.


 Interest expense is decrease in 2002 as compare to 2001.

 Due to decrease in interest expense the gross profit is increase in

2002.

 The total operating expense in 2002 are 23.06% where as 20.01%

in 2001.

 Operating profit in 2002 is 17.07% and in 2001 is 13.17%.

 Tax deduction from operating expense in 2002 is 8.558% and in

2001 it was 5.664%.

 Net profit in 2002 is 8.51% and 5.66% was in 2001.

Important Ratios: -

Advances To Deposit Ratio


Formula

Advances

Deposits

2002 28,319,401

51,684,984

= 54.7 %
Cash To deposit Ratio

Formula

Cash on hand and cash with other bank

Total Deposit

2002

1,122,962

51,684,984

Deposit To Total Liabilities

Formula

Total Deposits

Total Liabilities

2002

51,684,984

61,514,364

= 84.01%
Investment To Total Assets

Formula

Investment

Assets

2002

24,694,397

65,167,031

= 37.89%

Net Profit Margin

Formula

Profit After Tax

Total Income

2002

446579

5245912
= 8.51%

Return On Equity

Formula

Net Profit

Total Equity

2002

445,679

1,615,777

= 27.58%

Return On Total Assets

Formula

Net Profit

Total Assets
2002

446579

65,167,031

= 0.685%
Recommendations:-

1. The portion of investment in total assets is 37.89% in 2002 and

28.4% in 2001. this is not much favorable trend because

management should advance more and invest less.

2. The markup income decrease in 2002. This shows that banks

earn lesser in markup income as compare to 2001.