WELCOME TO THE
PRESENTATION
Group Members
1)Mohammad Wahidul Haque• 111-11-19062)Chinmay Roy• 111-11-19043)Md. Thowhidul Islam• 111-11-17754)Shohag Parvez• 111-11-17725)Hasna Yeasmin Sumi• 111-11-18986) Nadia Islam • 111-11-18777) Abul kalam Azad• 111-11-1770
Profitability Ratio Analysis ofIslami Bank Bangladesh Ltd.
andJamuna Bank Ltd.
Profitability Ratios
• There are many measures of profitability. As a group, these measures enable analysts to evaluate the firm’s profits with respect to a given level of sales, a certain level of assets or the owner’s investment. Without profits, a firm could not attract outside capital.
•Three frequently cited ratios of profitability that can be read directly from the common-size income statements are:
1. The Gross Profit Margin2. The Operating Profit Margin3. The Net Profit Margin
Others are: Earnings per share (EPS) Return on Total Asset (ROA)
Return on Equity
Profitability Ratio Analysis ofIslami Bank Bangladesh Ltd.
•Gross Profit MarginG.Profit Margin
2007-08 2008-09 2009-10 2010-11 2011-12
Gross Profit
Sales
2197854621
10256987534 = 0.21 X 100= 21%
5935982040
21369827458 = 0.24X 100= 24%
6969875318
21584679280 = 0.27 X 100= 27 %
7203574218
22654789123 = 0.31 X 100= 31%
8895125845
25369741852 = 0.39 X 100= 39%
2007-08 2008-09 2009-10 2010-11 2011-120
5
10
15
20
25
30
35
40
45
Gross Profit Margin
Gross Profit Margin
Decision: The higher the gross profit margin, the better amount of money is remaining the firm has paid for its goods. The lower the gross profit margin, the less amount of money is remaining the firm has after paying for its goods.
Net Profit MarginNet Profit Margin
2007-08 2008-09 2009-10 2010-11 2011-12
Earnings
available for common stock
holders
Sales
27743111949
10256987534 = 27%
31235982040
21369827458 = 28%
35369875318
21584679280 = 29.50%
42035742189
22654789123 = 31%
68951258456
25369741852 = 31.65%
2007-08 2008-09 2009-10 2010-11 2011-1224%25%26%27%28%29%30%31%32%33%
Net profit margin
Net profit margin
Decision: The higher the firm’s net profit margin, the better amount of money the firm has. Again, the lower the firm’s net profit margin, the less amount of money the firm has.
Return on Asset
Return on Asset 2007-08 2008-09 2009-10 2010-11 2011-12
Earnings available for common stock holders
Total Assets
47743111949
22167444018 = 25%
51235982040
21369827458 = 26.50%
55369875318
21584679280 = 27%
62035742189
22654789123 = 28%
78951258456
25369741852 = 30.20%
2007-08 2008-09 2009-10 2010-11 2011-120
5
10
15
20
25
30
35
Return on Asset
Return on Asset
Decision: The higher the firm’s return on total assets, the better effectiveness of management in generating profits with its available assets. The lower the firm’s return on total assets, the less effectiveness of management in generating profits with its available assets.
Return on Equity
Return on Equity
2007-08 2008-09 2009-10 2010-11 2011-12
Earnings available for common stock holders
Common stock equity
47743111949
332167444018 = 28%
51235982040
51369827458 = 29.50%
55369875318
641584679280 = 30%
62035742189
652654789123 = 32%
78951258456
685369741852 = 33.10%
2007-08 2008-09 2009-10 2010-11 2011-1225
26
27
28
29
30
31
32
33
34
Return on Equity
Return on Equity
Decision: The higher this return, the better off are the owners in terms of earning on the common stockholders investment in the firm. The lower this return, the less better off are the owners.
Earnings per share EPS 2007-08 2008-09 2009-10 2010-11 2011-12 Earnings after TaxNo.of share
1025497621
5090300 = 12.03
2565489521
10369524 = 31.10
3698527458
15698456 = 45.91
4203574218
20568546 = 60.21
5895125845
29136952 = 78.12
2007-08 2008-09 2009-10 2010-11 2011-120
10
20
30
40
50
60
70
80
EPS
EPS
Decision: The higher the EPS, the greater chance of profit of the firm. Whereas the lower EPS indicates the lower chance of profit of the firm.
Profitability ratio analysis of Jamuna Bank
Gross Profit MarginGross Profit Margin
2007-08 2008-09 2009-10 2010-11 2011-12
Gross Profit
Sales
197854621
1025698753 = 0.19 X 100= 19%
293598204
2036982745 = 0.14X 100= 14%
299987531
3158467928 = 0.17 X 100= 17 %
420357421
4265489123 = 0.21 X 100= 21%
689512584
55369741852 = 0.39 X 100= 25%
2007-08 2008-09 2009-10 2010-11 2011-120%
5%
10%
15%
20%
25%
30%
Gross profit margin
Gross profit margin
Decision: The higher the gross profit margin, the better amount of money is remaining the firm has paid for its goods. The lower the gross profit margin, the less amount of money is remaining the firm has after paying for its goods.
Net Profit Margin
Net Profit Margin 2007-08 2008-09 2009-10 2010-11 2011-12
Earnings available for
common stock holders
Sales
274311194
1025698753 = 21%
312359820
2036982745 = 18%
353698753
3158467928 = 21.50%
403574218
4265489123 = 27%
689512584
55369741852 = 30.65%
2007-08 2008-09 2009-10 2010-11 2011-120%
5%
10%
15%
20%
25%
30%
35%
Net profit margin
Net profit margin
Decision: The higher the firm’s net profit margin, the better amount of money the firm has. Again, the lower the firm’s net profit margin, the less amount of money the firm has.
Return on Asset
Return on Asset 2007-08 2008-09 2009-10 2010-11 2011-12
Earnings available for common stock holders
Total Assets
274311194
3216744401 = 15%
312359820
3336982745 = 16.50%
353698753
3458467928 = 17%
403574218
3864789123 = 18.75%
689512584
5536974182 = 20.20%
2007-08 2008-09 2009-10 2010-11 2011-120%
5%
10%
15%
20%
25%
Return on asset
Return on asset
Decision: The higher the firm’s return on total assets, the better effectiveness of management in generating profits with its available assets. The lower the firm’s return on total assets, the less effectiveness of management in generating profits with its available assets.
Return on Equity
Return on Asset 2007-08 2008-09 2009-10 2010-11 2011-12Earnings available for common stock holders
Common stock equity
274311194
4216744401 = 16.24%
312359820
3336982745 = 14.90%
353698753
4458467928 = 18.18%
403574218
5864789123 = 19.05%
589512584
6136974182 = 23%
2007-08 2008-09 2009-10 2010-11 2011-120.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Return on Equity
Return on Equity
Decision: The higher this return, the better off are the owners in terms of earning on the common stockholders investment in the firm. The lower this return, the less better off are the owners.
Earnings per share
EPS 2007-08 2008-09 2009-10 2010-11 2011-12 Earnings after TaxNo.of share
225976
40200 = 5.62
865489
50150 = 17.26
1055569
91250 = 25.91
25487963
125698 = 30.21
39858214
2913695 = 48.12
2007-08 2008-09 2009-10 2010-11 2011-120
5
10
15
20
25
30
35
40
45
50
EPS
EPS
Decision: The higher the EPS, the greater chance of profit of the firm. Whereas the lower EPS indicates the lower chance of profit of the firm.
Comparison Between the Islami Bank and Jamuna Bank of Profitability Ratio in the year 2011-12
Gross Profit
Margin
Net Profit Margin
Return on Asset
Return on Equity
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Islami BankJamuna Bank
EPS
2007-08 EPS
2008-09 EPS
2009-10 EPS
2010-11 EPS
2011-12 EPS
0
10
20
30
40
50
60
70
80
90
Islami BankJamuna Bank
THANK YOU !!!