Financial ratios can be divided into the following six parts.

A. B. C. D. E. F.

Liquidity ratios Activity ratios Leverage ratios Profitability ratios Investor ratios Bank special ratios

A. Liquidity ratios Current ratios Quick ratios Absolute Liquid ratio B. Activity ratios Inventory turnover ratio Average collection period Average payment period Total assets turnover ratio

C.

Leverage ratios Proprietary ratio Debt ratio Debt to Equity ratio Debt to Tangible net worth ratio Debt to Funds ratio External-Internal Equity ratio

D.

Profitability ratio Return on total assets Return on-equity Return on investment Return on fixed assets Average profit per branch Net profit Margin Interest income to total income Interest expense to total expense Return on advances

E. Investor Ratios Earning per share P/E ratio Dividend per share Dividend yield ratio Dividend payout ratio Break up value/Book value per share M/B ratio

F. Bank special Ratios Earning assets to total assets Return on earning assets

Net margin to earning assets Loan loss coverage ratio Equity to total assets Deposit time equity Loan to deposit ratio

Because here we are discussing ratio analysis of bank, therefore we will not discuss A & B category of ratios.

LEVERAGE/SOLVENCY ANALYSIS Solvency analysis of a firm indicates the amount of the other peoples money being used to generate profit. In general, these analyses are more concerned with long term debts, because these commit the firm to a stream of payments over the long run. Solvency analysis includes:

Proprietary ratio Debt ratio Debt to Equity ratio Debt to Tangible net worth ratio Debt to Funds ratio External-Internal Equity ratio

1. PROPRIETARY RATIO
Total equity

Total Assets

Year Total Equity Total Assets ratio

2005 (000) 23307763 298776797 0.08

2004 (000) 14552884 259173808 0.06

2. DEBT RATIO/ SOLVENCY RATIO

Total equity

Total Assets

Year Total Debts Total Assets ratio 3. DEBT TO EQUITY RATIO

Total Debt

2005 (000) 275469034 298776797 0.92

2004 (000) 244620924 259173808 0.94

Equity

Year Total Debts Equity ratio

2005 (000) 275469034 23307763 11.82

2004 (000) 244620924 14552884 16.81

4. DEBT TO TANGIBLE NET WORTH

Total Debt

Equity

Year Total Debts Tangible net worth ratio

2005 (000) 275469034 23058725 11.94

2004 (000) 244620924 14552884 16.81

5. DEBT TO FUNDS RATIO

Long term Debt

Long Term Funds

Year Long Term Debts Long Term Funds ratio

2005 (000) 41318331 64626094 0.63

2004 (000) 22455384 37008268 0.60

6. EXTERNAL INTERNAL EQUITY RATIO

External Equity

Internal Equity

Year External Equity Internal Equity

2005 (000) 275469034 23307763

2004 (000) 244620924 14552884

ratio

11.82 INTERPRETATION

16.81

The overall leverage position is showing better trend as compare to previous year. The contribution of equity in total assets is increasing, while the debt contribution is decreasing which is better for business. Equity ratio is increased which shows the better condition of the bank. Solvency Ratio is in good condition. So we can say that overall Solvency condition of the MCB is better with the comparison to the previous year.

PROFITABILITY ANALYSIS Profitability analysis of a firm indicates the overall efficiently of the management. Without profit a company can not attract the outside capital. Profitability analysis includes:

Return on total assets Return on-equity Return on investment Return on fixed assets Average profit per branch Net profit Margin Interest income to total income Interest expense to total expense Return on advances

1. RETURN ON ASSETS
Net Profit after Tax Total Assets

100

Year Net Profit after Tax Total Assets return

2005 (000) 8922415 298776797 3.0%

2004 (000) 2431532 259173808 0.93%

2. RETURN ON EQUITY
Net Profit after Tax

Equity

100

Year Net Profit after Tax Equity return

2005 (000) 8922415 23307763 38.28%

2004 (000) 2431532 14552884 16.71%

3. RETURN ON INVESTMENT
Net Profit after Tax

Investment

100

Year Net Profit after Tax Investment return

2005 (000) 8922415 69481487 12.84%

2004 (000) 2431532 67194971 3.62%

4. RETURN ON FIXED ASSETS

Net Profit after Tax

Fixed Assets

100

Year Net Profit after Tax Fixed Assets return

2005 (000) 8922415 8182454 109%

2004 (000) 2431532 7999821 30.39%

5. AVERAGE PROFIT PER BRANCH

Net Profit after Tax

No. of branches

Year Net Profit after Tax No. of branches Average Profit

2005 8922415000 1045 8546375

2004 2431532000 1045 2329054

6. NET PROFIT MARGIN

Net Profit after Tax

Interest Income

100

Year Net Profit after Tax Interest Income return

2005 (000) 8922415 17756232 50.25%

2004 (000) 2431532 9083863 26.77%

7. INTEREST INCOME TO TOTAL INCOME

Interest Income

Total Income

100

Year Total Income Interest Income return

2005 (000) 23169303 17756232 76.64%

2004 (000) 13316851 9083863 68.21%

8. INTEREST EXPENSE TO TOTAL EXPENSE

Interest Expense

Total Expense

100

Year Total Expense Interest Expense return

2005 (000) 9347059 2781468 29.76%

2004 (000) 9493097 2057640 21.67%

9. RETURN ON ADVANCES
Interest Income

Total Loans

100

Year Interest Income Total Advances/ Loans return

2005 (000) 17756232 180322753 9.85%

2004 (000) 9083863 137317773 6.61%

INTERPRETATION

Profitability analysis shows the entire performance of a business and if we study the profitability trend of bank then it will clear to us that it showing a positive trend. Net profit after tax is increased as compare to previous year, due to it return on assets, equity and investment is increasing. Not only overall profit is increasing but also average profit of all the branches is increasing. Bank interest income is also increasing due to more advances in this year. This year bank total deposits are also increased and thats why interest expenses are showing up ward trend.

INVESTOR ANALYSIS Investor analysis or market analysis are related to firm market valve, as measure by its current share price to certain accounting values. Investor analysis includes:

Earning per share P/E ratio Dividend per share Dividend yield ratio Dividend payout ratio Break up value/Book value per share M/B ratio

1. EARNING PER SHARE

Net Profit after Tax No. of Shares

Year Net Profit after Tax No. of Shares Earning

2005 8922415000 426532700 21

2004 2431532000 337180000 7.21

2. P/E RATIO
MP Per Share

EPS

Market price per share is Rs.247.75 on 4th Jan.2007

Year MP Per Share EPS ratio

2005 247.75 21 11.80

2004 247.75 7.21 34.36

3. DIVIDEND PER SHARE

Total Dividend

No, of Shares

Year Total Dividend No. of Shares DPS

2005 1288871000 426532700 3.02

2004 842950000 337180000 2.5

4. DIVIDEND YIELD RATIO

DPS

MV Per Share

Year DPS MV Per Share ratio

2005 3.02 247.75 0.012

2004 2.5 247.75 0.01

5. DIVIDEND PAYOUT RATIO

DPS

EPS

100

Year DPS EPS ratio

2005 3.02 21 14.38%

2004 2.5 7.21 34.67%

6. BOOK VALUE PER SHARE

Equity

No. of Shares

Year

2005

2004

Equity No. of Shares ratio

23307763000 426532700 54.64

14552884000 337180000 43.16

7. M/B RATIO
MV Per Share BV Per Share

Year BV Per Share MV Per Share ratio

2005 54.64 247.75 4.53

2004 43.16 247.75 5.74

INTERPRETATION

MCB has also has good investment opportunities for the investors. This bank has more attraction for investors as compare to previous year. Earning per share is increased due to increase in profit. Book value and market valve of one share in also increased as compare to 2004. Only dividend yield and payout ratio is decreased because bank declared fewer dividends as compare to last year but it is also in favor of investors because it will increase wealth of shareholders and ultimate benefit to investors.