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Final Project Report
Profitability Financial Ratio Analysis
1786890108585
16319580645
Project Supervisor
Majid Riaz

Submitted By
Muhammad Umer Waheed
3609
(Reg.132143015)
Research and Development Section, Department of Business Administration,
NCBA&E DHA Campus

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Table of Contents
Acknowledgements: …………………………… 3
Summary: ………………………………………….. 4
Chapter# 1
INTRODUCTION
1.1 Meezan Bank: ………………………… 4
Vision: …………………………… ……… 5
Mission: ………………………… ……… 5
2 Bank Islamic: …………………………….. 5
Vision: …………………………………….. 5
Mission: ………………………………….. 5
1.3 Dubai Islamic Bank: ……………………. 5
Vision: …………………………………….. 6
Mission: ………………………………….. 6
Chapter# 2
Literature Review
2.1 Gross Margin Ratios: ………………….. 8
2.2 Operating Margin Ratios: ……………. 8
2.3 Net Profit Margin: ……………………… 9
2.4 Return on Assets: ……………………….. 9
2.5 Assets Turnover Ratio: ………………… 9
2.6 Fixed Assets Turnover Ratio: ………… 10
2.7 Return on Equity: ……………………….. 10
2.8 DuPont Formula: ………………………… 10
2.9 Return on Capital Employed Ratio: 10
Chapter# 3
Objectives & Significance
3.1 Objectives: ………………………………… 11
3.2 Significance: ………………………………. 11
3.3 Significance of Stakeholder: …………. 12
Chapter# 4
Methodology
4.1 Population: ………………………………… 12
4.2 Sample: ……………………………………… 12
4.3 Data Collection Sources: ………………. 13
4.4 Data Analysis: …………………………….. 13
Chapter#5
Ratio Analysis and Interpretations
5.1 Net Profit Margin: ……………………….. 13
5.2 Return on Equity: ………………………… 15
5.3 Operating Margin Ratio: ………………. 17
5.4 Gross Margin Ratio: …………………….. 19
5.5 Return on Assets: ……………………….. 21
5.6 Assets Turnover Ratio: ………………… 23
5.7 Fixed Assets Turnover Ratio: ………… 25
5.8 DuPont Formula: ………………………… 27
5.9 Return on Capital Employed: ……….. 28
Comparison & Reasons: ……………………… 31
Conclusion & Recommendation: …………. 32
Bibliography: ……………………………………. 33

Dedication
“In The Name Of ALLAH The Most BENEFICIENT And The Most MERCIFUL”, After “ALLAH ALMIGHTY” I Want To Dedicated My Effort To My Parents MR & MRS WAHEED, My Beloved Friends And All My Well Wishers Who Hold Up Me During My Educational Session.

Acknowledgements
Honour be to Almighty Allah (the Most Merciful & the Most courteous), for enable me to achieve this research work and all respects for the Holy Prophet Muhammad (Peace be upon Him) who permit me to recognize my creator.

I am extremely grateful to my polite instructor “Sir Majid Riaz” from National College of Business Administration & Economics (DHA Campus) who help me, inspiring suggestion and support helped me in all the time of research and characters of this final project.

I would like to pass on my pleased to all those people who help and lead me to completion my final project. Success depends upon the guidelines and support.

Summary:
Pakistan makes bank industry in 1947 when state bank take the dare to create home currency of Pakistan. This industry gain boom when operations started Meezan Islamic bank in 1997. For the purpose of pursue the sharia of Islam, Bank Islami, was initiated in 2005. Later on Dubai Islamic bank joined the competition in 2006. Banking industry of Pakistan is very important as it contributes 5.98% to GDP and around 2.5 million people are employed by this industry in employee and management roles with better paying jobs than the break of the industry.

This development is base on three Islamic banks. These banks are scheduled on the stock exchange and are the major challenging companies in the banking industry of Pakistan. It includes their important financial data and introduction; gain from the yearly reports on their web sites. These data has been overseeing and simplify. Three banks have been evaluated by ten Profitability ratios. Practical explanation of each ratio has been prepared in order to evaluate the banks. The Conclusions of the performance of the banks is based on results of profitability ratios that have been used, and improve these ratios by given recommendations.
It has been complete after the results of ratios; from the other two companies Meezan Islamic bank has better ratios. The reasons of behind these high ratios are higher sales volume, healthier asset management and controlled the liabilities. There are some ratios in Dubai Islamic bank, which are not well thought-out. Low sales volume, large number of assets and liabilities and higher operating costs is the main reason behind the low ratios of bank Islami.

Chapter 1

Introduction
Project Introduction:
Financial analyses ratio shows the entire overview of all types of business profit that’s why I have selected this topic. Every firm has most be concerned with its profit. This project helps me to know about the financial analyses ratio and also I can increase my knowledge and skill toward financial growth. Initially we using financial ratio to find the current position of banks. How we use healthier recourses for more than one company, and also calculate the performance or the standard of the company by financial ratio.

Performance of management, how they work economically and overall routine or effectiveness of the company also shows by financial ratio. Every company uses the financial ratio to evaluate the bottom line of the company.
Bank Introduction:
Bank industry of Pakistan was born in 1947 when state bank took the challenge to produce local currency of Pakistan. Banking industry of Pakistan is very important as it contributes 5.98% to GDP and around 2.5 million people are employed by this industry in employee and management roles with better paying jobs than the rest of the industry.The bank is a financial organization which accepts the deposit from its customers and grants the loans to his customers. Wealth management, currency exchange and safe deposit are a different ways of services of banks to his customers. “Commercial bank and Islamic bank” is two types of banks. In most of the countries Government and Central bank control these kinds of bank. They gave the boost up of his country currency. Bank invests money in different places for the earning profit from the deposits money by the people or bank also gave loans to the people or charges the interest. And on deposits of his customer they also gave the small interest. Banks also gave the online service like online Loan and deposit and this type of online banking operate on the internet.

Commercial Bank:
When people want to deposit his money and want money as the loan at that time Commercial banks are those who gave it to the people, but for the earning profit they charge the interest.

Islamic bank
Islamic banks are those banks where they walk on the path of Islamic law or Sharia. They deal in profit and loss not in interest. I chose an Islamic bank for the project, there are the banks
Meezan Bank, Islamic Bank, Dubai Islamic Bank
1.1 Meezan Bank
Meezan bank is the largest bank in Pakistan, which is deal in Islamic way and which is higher one who grows quicker than quicker in Pakistan. Meezan bank headquarters in Karachi, Pakistan. Meezan bank started his services in Pakistan 1997. More than 570 branches in 140 cities of Pakistan, Meezan bank provide his Islamic services for his customers. Meezan bank operates his Islamic services of under the Islamic Sharia. The state bank of Pakistan gave first license to Meezan bank in 2002. Last 5 years Meezan bank receives the award. In Pakistan the Meezan bank is the best bank in the banking industry.

Vision
Meezan bank wants; it is the first bank where people come in and save the money in his bank. They gave the right path to his customer to save the money without the interest. Meezan bank is the father of all Islamic banks in Pakistan.

Mission
We gave our service under the Sharia to our customer and gave him the awareness of the latest technology and the latest services.
1.2 Bank Islami
Bank Islami started his services in Pakistan in 18 October 2004. Bank Islami is the second bank in Pakistan who gave Islamic services to his customer. And they received his license from the state bank of Pakistan on 31 March 2005. And they work under the Sharia or Islamic law.

Vision
Bank Islami wants his bank on the top of the table of bank industry. People want to save his money in the bank and their choice the bank Islamic. They run his services under the Sharia or Islamic law.
Mission
Bank Islami creates the value of shareholders by Sharia, latest technology, product and services. Bank Islami differentiates through Innovation, Excellent services; Amazing offers and gave the solution of the problem to his customers.

1.3 Dubai Islamic bank
The Dubai Islamic bank starts his operation in Pakistan in 2006. And provide the best service to his customer. Bank Islamic grow very fast in Pakistan because he gave services under the Sharia or Islamic law.

Vision
The Dubai Islamic bank wants the number one financial institution whole over the world. They provide everything what the customer wants.
Mission
They improve and maintain him in the position on the world’s leading Islamic bank. They improve him through, Improve in technology, Improve in product and services, Dynamic and Innovative.

Chapter 2

Literature Review
FINANCIAL PERIOD UNDER-CONSIDERATION FOR ANALYSIS:
Analysis of years 2014, 2015 and 2016 has been done.2 Literature Review:Foulke (1968) many objectives like to calculate the bank’s ability, effectiveness of bank, estimation and routine of the bank are determine by profitability ratios of Islamic banks. In the same way, many prominent book authors like B. W. Miller, George Soros suggest that each firm to compute or to use the ratios in classify to ensure the routine and place of the firm.
AT-Hanasoglou, Brissimis ; Delis (2005) accomplished that the banks have higher return on assets ratio and have lesser leverage. In the same way for analyze profitability of Islamic banks.

E.A.Adedeji (2014) accomplished that medium for discovering and civilizing the bank’s routine through past experience. In the same way for analyzes profitability of Islamic banks.
LEV & Thiagarajan (1993) accomplished that particular profitability ratio is supportive to evaluate the future change in profits.
Beaver (1996) the future performances of the organization is computing by Profitability ratios, for example, these ratios used to for considering its financial problems and to eliminate.
Kosmidou, K., Tanna, S. And Pasiouras, F. (2012) this article shows the outcome of bank definite characteristics, situation and constitution. The strength of bank has positive and strong influence on profitability showed by the conclusions specific factors of bank that strengthening the bank performance.

Sudin, (2004) In banking studies profitability ratio of Islamic banking is one of the most significant and well-liked topics between researchers. The researchers classify many factors which persuade on the profitability ratio of Islamic banking for last many years. Long ago all profitability ratios have been for conventional banks.
Acharya (2013) thrash out the liquidity position of banks and evaluate the relationship that lie down between liquidity and profitability of the firms. The want of the learning was to classify the liquidity management capability and profitability routine of choose banks. Liquidity position has positive gust on the on the profitability of the industry was over the investigation.

At the end, in this study, the main purpose and objective is to identify and calculate the profitability and compare all the ratios with three banks under discussion.

The primary focus was on the following sales, assets, operating profit & net profit by analyzing the profitability ratio of Islamic banks by comparing the results of three years under the consideration. The main reason for all this is to provide better understanding about banks performance.

2.1Gross Margin Ratios:
White sondhi (2002) is define gross profit margin ratio appropriate the bond among sales and manufacturing costs.

Gross margin ratios are defined as:
Gross margin = gross margin / sales
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “m.opton”, “given” : “”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “journal of agriculture economics”, “id” : “ITEM-1”, “issue” : “1”, “issued” : { “date-parts” : “2008” }, “title” : “a development of gross margin analysis”, “type” : “article-journal”, “volume” : “16” }, “uris” : “http://www.mendeley.com/documents/?uuid=b2e4c6cc-b4d5-4f34-8401-254d0bf4b9f5” } , “mendeley” : { “formattedCitation” : “(m.opton, 2008)”, “plainTextFormattedCitation” : “(m.opton, 2008)”, “previouslyFormattedCitation” : “(m.opton, 2008)” }, “properties” : { “noteIndex” : 8 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }m.opton, (2008) is defining gross margin analysis taken the error by calculating the margin among manufacturing and variable costs for every firm. Gross margin plays as a coaching to specification of firms when changing a firm system and action an absolute means of equivalent the effectiveness of the firm.

2.2 Operating margin:
Brigham, (1997) is define profit margin is net of all expenses; when net income dividing by sales then operating margin is calculated. When the profit margin is down then this ratio is calculated.
It is defined as:
Net Profit Margin = Net Income ÷ Sales
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “keown, martin”, “given” : “petty”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “financial ratio analysis”, “id” : “ITEM-1”, “issued” : { “date-parts” : “2008” }, “title” : “profitability analysis ratio analysis of textile industry”, “type” : “article-journal”, “volume” : “3” }, “uris” : “http://www.mendeley.com/documents/?uuid=499cdfbf-ab50-48f5-869f-9af6ae17cf85” } , “mendeley” : { “formattedCitation” : “(keown, martin, 2008)”, “plainTextFormattedCitation” : “(keown, martin, 2008)”, “previouslyFormattedCitation” : “(keown, martin, 2008)” }, “properties” : { “noteIndex” : 8 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }keoun, martin, (2008) Operating margin ratio strengthen how good of company is domineering its cost of action, in condition of both the cost of goods sold and operating expenses is relative to the company.

2.3 Net Profit Margin:
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “nailal husna”, “given” : “rika desiyanti”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “journal of management and applied science”, “id” : “ITEM-1”, “issue” : “4”, “issued” : { “date-parts” : “2016” }, “title” : “measurement of net profit margin”, “type” : “article-journal”, “volume” : “2” }, “uris” : “http://www.mendeley.com/documents/?uuid=9cd3cd2a-f77e-402d-aefc-a89cacb62d86” } , “mendeley” : { “formattedCitation” : “(nailal husna, 2016)”, “plainTextFormattedCitation” : “(nailal husna, 2016)”, “previouslyFormattedCitation” : “(nailal husna, 2016)” }, “properties” : { “noteIndex” : 11 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }nailal husna, (2016) is to measure the gust of net profit margin on company’s financial effectiveness. Follow variable means dependent variable and profit margin is following variable while unfollow variable means independent variable and leverage ratio, current ratio are unfollow variable. The reason of this study is that the company experience the difference in net profit margin. Company profit also find out through this. Defined as:
Net Profit Margin = Net Income / Sales
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “Brigham”, “given” : “Gapenski”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “journal of management sciences”, “id” : “ITEM-1”, “issued” : { “date-parts” : “1997” }, “title” : “measurement of net profit”, “type” : “article-journal”, “volume” : “6” }, “uris” : “http://www.mendeley.com/documents/?uuid=ccb560a8-c8b1-4b3d-bb0c-e922aabe7727” } , “mendeley” : { “formattedCitation” : “(Brigham, 1997)”, “plainTextFormattedCitation” : “(Brigham, 1997)”, “previouslyFormattedCitation” : “(Brigham, 1997)” }, “properties” : { “noteIndex” : 11 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }Brigham, (1997) when profit margin ratio is down the industry intermediate then they provide a profit of sales and profit margin is net of all expenditure is calculate by dividing Net Income by sales.

2.4 Return on Assets:
White sondhi (2002) ROA is examines income with total assets. Pre-tax substructure using EBIT as the return duration ROA can be figure out. Defined as:
Return on Assets = Net Income / Average Total Assets
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “SalehNejad”, “given” : “h. gayour”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “quarterly journal of management”, “id” : “ITEM-1”, “issued” : { “date-parts” : “2010” }, “title” : “impact on return on assets”, “type” : “article-journal”, “volume” : “1” }, “uris” : “http://www.mendeley.com/documents/?uuid=d3625c70-4521-448b-8f1b-b61dfa460fe9” } , “mendeley” : { “formattedCitation” : “(SalehNejad, 2010)”, “plainTextFormattedCitation” : “(SalehNejad, 2010)”, “previouslyFormattedCitation” : “(SalehNejad, 2010)” }, “properties” : { “noteIndex” : 11 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }SalehNejad, (2010) ROA is a critical element of profitability ratios and circulate management achievement and ability with esteem to firm’s capital and assets. ROA also classify each accounting profit in all price variables might be challenging decision making for firm’s efficiency and effectiveness.

2.5 Assets Turnover Ratio:
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “Kim”, “given” : “”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “journal of financial in intermediation”, “id” : “ITEM-1”, “issued” : { “date-parts” : “1997” }, “page” : “151-176”, “title” : “the effect ofnliquidation of assets turnover ratio”, “type” : “article-journal”, “volume” : “7” }, “uris” : “http://www.mendeley.com/documents/?uuid=0999e3a5-01eb-4cfa-b34e-3196ad3de6fb” } , “mendeley” : { “formattedCitation” : “(Kim, 1997)”, “plainTextFormattedCitation” : “(Kim, 1997)”, “previouslyFormattedCitation” : “(Kim, 1997)” }, “properties” : { “noteIndex” : 12 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }Kim, (1997) with in a company uses three methods to calculate assets liquidity, the hit order in which assets are sold, the base of the buyer market and density at which assets are sold. The dollar size of a particular type of assets sold divided by backflow of assets is the method to calculate assets turnover ratio.

2.6 Fixed Assets Turnover Ratio:
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “Krueger”, “given” : “Filbeck.&”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “journal of business”, “id” : “ITEM-1”, “issue” : “2”, “issued” : { “date-parts” : “2005” }, “page” : “11-18”, “title” : “industry related difference in fixed assets management”, “type” : “article-journal”, “volume” : “20” }, “uris” : “http://www.mendeley.com/documents/?uuid=67131935-e41e-4969-b48d-8cd5a579bce4” } , “mendeley” : { “formattedCitation” : “(Krueger, 2005)”, “plainTextFormattedCitation” : “(Krueger, 2005)”, “previouslyFormattedCitation” : “(Krueger, 2005)” }, “properties” : { “noteIndex” : 12 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }Krueger, (2005) fixed asset management have fair level, the essential element is the achievement and ability of the administration of the company who produce major choices in order to administer the major parts of receivables, inventory and other problems as well.

ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “dr. i. satyanarayana”, “given” : “N.B.c sindu”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “international journal of scientific research and management”, “id” : “ITEM-1”, “issue” : “3”, “issued” : { “date-parts” : “2015” }, “page” : “2500-2504”, “title” : “evaluation of fixed assets management”, “type” : “article-journal”, “volume” : “3” }, “uris” : “http://www.mendeley.com/documents/?uuid=05cafaec-7f14-423a-b772-9b3f61e0ece1” } , “mendeley” : { “formattedCitation” : “(dr. i. satyanarayana, 2015)”, “plainTextFormattedCitation” : “(dr. i. satyanarayana, 2015)”, “previouslyFormattedCitation” : “(dr. i. satyanarayana, 2015)” }, “properties” : { “noteIndex” : 12 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }dr. i. satyanarayana, (2015) fixed assets is a form used in accounting for assets and property that cannot easily changed in to cash, fixed assets also common as tangible assets or property plant and equipment. Current assets also evaluation with this, such as cash or bank accounts that can be draw as liquid assets.
2.7 Return on Equity:
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “copeland, koller”, “given” : “and murrin”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “journal of finance”, “id” : “ITEM-1”, “issued” : { “date-parts” : “1996” }, “title” : “valuation measure and managing the value of comapnies”, “type” : “article-journal”, “volume” : “7” }, “uris” : “http://www.mendeley.com/documents/?uuid=ffe8fc9b-ed15-4c6c-aff4-9522df71acf7” } , “mendeley” : { “formattedCitation” : “(copeland, koller, 1996)”, “plainTextFormattedCitation” : “(copeland, koller, 1996)”, “previouslyFormattedCitation” : “(copeland, koller, 1996)” }, “properties” : { “noteIndex” : 12 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }Copeland, koller, (1996) diverge that ROE is a short term accomplish that too much intention on it can frontage rank a company to take no notice of long term success profitability that night boosts shareholder importance. Defined as:
Return on Equity = Net Income / Average Stockholder’s Equity
ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “author” : { “dropping-particle” : “”, “family” : “white, sondhi”, “given” : “Fried”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “journal of acvounting and finance”, “id” : “ITEM-1”, “issued” : { “date-parts” : “2002” }, “title” : “impact on ROE in textilenindustry”, “type” : “article-journal”, “volume” : “3” }, “uris” : “http://www.mendeley.com/documents/?uuid=a85a5e06-e9e2-43cd-a930-6fd37d372b5d” } , “mendeley” : { “formattedCitation” : “(white, sondhi, 2002b)”, “plainTextFormattedCitation” : “(white, sondhi, 2002b)”, “previouslyFormattedCitation” : “(white, sondhi, 2002)” }, “properties” : { “noteIndex” : 11 }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }white, sondhi, (2002) return on equity counter in case the company is give a fine return on the capital obtainable by the company’s investors. On the common investor’s investment Return on Equity is the accounting rate of return gain.
2.8 DuPont Formula:
Sheela & Karthikeyan (2012) The DuPont make-up was build in the early 1900s to establish the profitability of a company changed twice after its premature ideas, in 1918 the valid DuPont canon of financial ratio reassess was polished by F. Donaldson brown, an wangle at DuPont in protest of receptive the finance of a company. Mathematically relation between profitability and return on equity that was recognized by the return on assets was accepted by them.

2.9 Return on Capital Employed Ratio:
Rutherford (2002) ROCE is usually used as a completion capability in the profit making sector and in outcome, attain how superior management is competent to grip a company’s assets to make return. ROCE is normally indicated as identifying, management’s capabilities and ability in via the company’s assets to create profit.

Chapter 3
Objectives ; Significance
3.1 Objectives:
I will bring out this project to identify the financial routine ; situation of the Meezan bank, Bank Islami and Dubai Islamic bank. This Project will emphasize:
To analyze the Meezan bank, Bank Islami and Dubai Islamic bank effectiveness in overseeing their capital for generating profit
To consider the work of the capital formation of the Meezan bank, Bank Islami and Dubai Islamic bank i.e. how much external and internal debt financed to the bank assets.

To locate out that how efficiently Meezan bank, Bank Islami and Dubai Islamic bank are maximizing their profits by overprotective their interest expenses
To evaluate the Meezan bank, Bank Islami and Dubai Islamic bank ‘income with their expenses
Meezan bank, Bank Islami and Dubai Islamic bank capable to pay the current liabilities from their cash equivalents.
Price earnings ratio is used to calculate the Meezan bank, Bank Islami and Dubai Islamic Bank.

Profitability of the banks is result out by the objective of net operating margin. Highly profitable bank like Meezan bank, Bank Islami, Dubai Islamic Bank will lesser the ratio.
The major and primary purpose of operating cash flow is to ensure the capability of a bank to pay reverse its shot term debts.

In case of progress to deposit ratio Meezan bank, Bank Islami and Dubai Islamic Bank, which have far above the ground value of this ratio that the bank is earned as greatly as it could.

3.2 Significance :This Project helpful the bank in study, to make good decisions, to capitalize on profits, reduces expenses and performs efficiently by overseeing their resources and utilizing their assets economically. This will definitely benefit by provided that a general idea of their financial performances under study and resultant in a better intra firm contest for three financial years. It has a capable perceptive of the shareholders as fine as for the attracted investors, because it provide an improved and easy outline of the financial figures and routine. It offers a reconsider of their current performances and efficiencies for the working strength. Likewise, it can also helpful for the researchers, management sciences and students of business studies to understanding profitability ratios.
3.3 Significance of Stakeholder:
When the profit margin is low or down then the net profit ratio is calculated. In this situation stakeholder intense to invest. Net profit margin ratio reflects by fluctuation that has major effect on stakeholder.

Return on equity ratio shows the return on capital by investors, which shows positive trend upon the stakeholders as well.
To improve the ability of company, stakeholder shows their interest in the company by the highly operating cash flow ratio.

The extend ratio shows the strategy in which investors or stakeholders hold and short position as well.

There is so much benefit for the investor from the gross ratio. Positive rate shows greatly striking for stakeholders.
The greater the revenue generated by the company, more the efficiency achieved from the stakeholders.

Company earns higher profit when the ratio is higher. This show a positive movement on the way to stakeholders.

The higher the share prices and effectiveness of the company. More prices for each share shows high result on stakeholder.

Chapter 4
Methodology
4.Methodology:
Methods and principles that are used in the field of study are the theoretical analysis of methodology.

4.1Population:
There are 21 Islamic banking institutions that are populated in Islamic banking industry.

4.2 Sample:
There are three convenient sampling in the size of sample.

4.3 Data Collection Sources:
The data are downloaded from the websites of the companies that are involved in this study and the data in this project is secondary and its obtained from annual reports of the companies.
4.4 Data Analysis:
We provide conclusions of each financial ratio, do a trend analysis and analyze briefly all the three companies. We used Ms Excel and calculator to calculate the process of required data and also graphs and calculations for these functions.

Chapter 5
Ratio Analysis & Interpretation
5. Ratio Analysis and Interpretations:
5.1 Net Profit Margin:
The Net Profit Margin Ratio is used to calculate the success of a business. In this ratio we compare company’s net profit with the sales and compute the result in percentage. Dividing the net profit by net sales then net profit margin is obtained because it is calculated in percentage. We multiplied the fraction with 100.

Formula: Profit Margin = Net Income / Net Sales (revenue)Table: Profit Margin  2014 2015 2016
Meezan Bank 6898534/28803059=
0.239506991 5022509/33113741=
0.15167447 5561611/31429594=
0.1769546
Bank Islami 469722/7812302=
0.06012594 272387/8834160=
0.03083338 843757/10127616=
0.0833125
Dubai Islamic
Bank 925531/7523271=
0.123022419 430555/8725646=
0.04934362 855540/9486289=
0.090187
Figure 1

5.1.1 Interpretation:
To measure the Profitability of the business Net Profit Margin Ratio is very useful ratio. A high ratio indicates the efficient management of the business.

5.1.2 Trends Analysis:
In figure 1 show that the Bank Islami net profit margin ratio was 0.060 in 2014 but there is a decrease in 2015 in net profit margin. In 2016 this ratio has improved as compared to 2015.

Meezan bank net profit margin ratio was 0.239 in 2014 but there is a decrease in 2015 in net profit margin. In 2016 this ratio has improved as compared to 2015.

Dubai Islamic bank net profit margin ratio was 0.123 in 2014 but there is a decrease in 2015 in net profit margin. In 2016 this ratio has improved as compared to 2015.

5.1.3 Comparison and Reasons:
Meezan bank has a net profit margin ratio of 0.2395 which is higher as compare to Dubai Islamic bank net profit margin ratio of 0.1230 and Bank Islami net profit margin ratio of 0.060 in 2014.reason behind that the mission bank was on the top because of the large number of Sales and net income and Dubai Islamic and bank Islami low because its net income and sales below.

In 2015 Meezan bank maintained its position on the top or it’s Ratio of 0.1516 mainly as a result of large sales and net income. Dubai Islamic Bank on the second position as it was in the previous year, with a decrease in ratio due to decreased sales and net income. Bank Islami was third in the competition along with a decrease in its ratio than the previous financial year.

In figure 1 show that the Meezan bank defended its position in financial year 2016 and remained on top with a good increase in its sales and net income resulting in an increase in its net profit margin ratio in 0.1769 which was 0.1516 in the last year. Dubai Islamic Bank on the second position as it was in the previous year, with an increase in ratio due to increased sales and net income. Bank Islami was third in the competition, but they have improved him on this year.

5.2 Return on Equity:
Return on equity (ROE) ratio is used to calculate the company’s profitability which means how much profit a company earns by investing its shareholder money.

ROE is calculated by dividing the net income of company by equity of the company. It is calculated in percentage form. The ratio of a company’s loan capital (debt) to the value of its ordinary share (equity).

Use a borrowed capital for (an investment).

Table : EQ Table * ARABIC 2 :Return on equity
2014 2015 2016
Bank Islami 0.054465219 0.01944654 0.0641919
Meezan Islamic Bank 0.455760773 0.50087954 0.5546425
Dubai Islamic Bank 0.086082342 0.0617192 0.0836668
Figure 2

5.2.1 Trends Analysis:
In figure 2 shows that the Bank Islami return on equity ratio was 0.054 in 2014 but there is a decrease in 2015 in return on equity ratio. In 2016 this ratio has improved as compared to 2015 and 2014
Meezan Islamic bank return on equity ratio was 0.455 in 2014 but there is an increase in 2015 in return on equity ratio. In 2016 this ratio has improved as compared to 2015 and 2014
Bank Islamic bank return on equity ratio was 0.086 in 2014 but there is a decrease in 2015 in return on equity ratio. In 2016 this ratio has improved as compared to 2015 and 2014
5.2.2 Comparison and Reasons:
In financial Year 2014, Meezan bank Return on Equity Ratio is more than other competing banks. Meezan bank is on the first Position within the competition with a ratio of 0.455 it has comparatively low stock holder’s equity then other two banks. The Dubai Islamic bank has a ratio of 0.086 and is in second position within the competition. Bank Islami has a ratio of 0.054 which is lower than both competing banks, which left bank Islami on the third position.

In figure 2 shows that in Financial Year 2015, Meezan bank remained on the first number with an increased ratio of 0.500 then previous years, which is better than other competing banks. The Meezan bank ratio increases due to an increase in its equity along with a prominent increase in its income. The Dubai Islamic bank is on the second number with a ratio of 0.061 which is less than last year ratio. Company’s equity and net income decreased, which resulted in its ratio decrease. Bank Islami is in the third position with a ratio of 0.019 which is lower than the previous year and current year ratios of other companies.

In table 2 shows that in Financial Year 2016, the Meezan bank ratio is 0.554 which increased as a result of the noticeable increase in its income and Equity. The Dubai Islamic bank is on the second position with a ratio of 0.083. Equity and Income of Dubai Islamic bank also increased then previous years. Bank Islami Ratio is 0.064 in the current year, which is a lot better than the previous year’s 0.019. The bank Islami ratio increased due to a remarkable increase in its income and equity, which was in lower figures in the previous financial year.

5.3 Operating Margin Ratio
The operating Margin ratio is simply a ratio which is used to check how well the current liabilities are covered company’s cash flow.

The operating Margin ratio is calculated by dividing the operating income by the current sales.

Equation SEQ Equation * ARABIC 4: Operating Margin Ratio = Operating Income / Sales 
Table: Operating Margin ratio:
2014 2015 2016
Bank Islami 0.008816591 0.17855331 0.0575478
Meezan Islamic Bank 0.110626452 0.0339594 0.0127912
Dubai Islamic Bank 0.060791744 0.05233171 0.0004692

5.3.1 Trends Analysis:
In figure 4 shows that the Bank Islami operating Margin ratio was 0.008 in 2014 but there is a giant increase in 2015 in operating margin ratio. In 2016 this ratio was going down as compare to 2015 but they better than 2014.

Meezan Islamic bank operating margin ratio was 0.110 in 2014 but there is a giant decrease in 2015 in operating margin ratio. In 2016 this ratio was going down as compare to 2015 and 2014.

Dubai Islamic bank operating margin ratio was 0.060 in 2014 but there is decrease in 2015 in operating margin ratio. In 2016 this ratio was going down as compare to 2015 and 2014.

5.3.2 Comparison and Reasons:
Meezan bank has an Operating margin Ratio of 0.110 which is higher as compared to Dubai Islamic bank Operating margin ratio of 0.060 and Bank Islami Operating margin ratio of 0.008 in 2014. Because of its daily transaction or its account holder deposit the cash or withdraw in giant amount becomes Operating Margin Ratio is favourable of Meezan Islamic Bank during this year.
Bank Islami has an Operating margin Ratio of 0.178 which is higher as compared to Dubai Islamic bank Operating margin ratio of 0.052and Meezan bank Operating margin ratio of 0.033 in 2015. During this year Bank Islami operating margin ratio is favourable because of its daily transaction or its account holder deposit the cash or withdraws the cash in giant amount or this year Meezan bank going down and down or Dubai Islamic bank stable his position.
Bank Islami has an Operating margin Ratio of 0.057 which is higher as compared to Meezan bank Operating margin ratio of 0.012 and Dubai Islamic bank Operating margin ratio of 0.0004 in 2016.In this year Bank Islami operating margin ratio is favourable because of its daily transaction or its account holder deposit the cash or withdraw the cash in giant amount or this year Meezan bank improved himself or Dubai Islamic bank loss second his position.
5.4 Gross Margin Ratio:
Gross Margin Ratio = Gross Profit / Sales
Explanation:
Gross Profit Margin is a financial link that is used to evaluate the financial strength and mould of the company. The company is powerless to pay its operating expenses if Gross Margin is engaged. Gross margin tell us different ways to make profit of its company. Gross margin ratio also tells us using the resources of the company to run its operations in the market efficiently. It finds out company’s efficiency and effectiveness by using its supplies and labour.

Table: Gross margin ratio2014 2015 2016
Bank Islami 0.20119517 0.26174242 0.1775397
Meezan Islamic Bank 0.238974296 0.21472272 0.2297907
Dubai Islamic Bank 0.121237919 0.04697408 0.0971867
Figure 4

5.4.1 Trends Analysis:
This figure shows that the Bank Islami gross margin ratio has decreased in 2014 as compared to 2015 and in 2016 there is a giant increase in gross margin ratio and in 2016 there is decreased as compared to 2015 and 2014.

Meezan Islamic bank gross margin ratio has increased in 2014 as compared to 2015 and 2016 and in 2015 there is decrease in its gross margin ratio and in 2016 there is decreased as compared to 2014 but there is increased as compared to 2015.

Dubai Islamic bank gross margin ratio has increased in 2014 as compared to 2015 and in 2015 there is a giant decrease in gross margin ratio and in 2016 there is increased as compared to 2015.

5.4.2 Comparison and Reasons:
Meezan bank was on the front among the competition with a ratio of 0.238 in 2014. Bank Islami was in the second position with a ratio of 0.201 and Dubai Islamic bank on the third Position with a ratio of 0.121. During this year Meezan Bank gross margin ratio was favourable because his customer prefers this bank for taking advance because they low charge the interest.
Bank Islami was on the front among the competition with a ratio of 0.261 in 2015. Meezan bank was in the second position with a ratio of 0.214 and Dubai Islamic bank on the third Position with a ratio of 0.046. During this year Bank Islami gross margin ratio was favourable because his customer prefers this bank for taking advance because they cannot charge the interest or Meezan bank loss his position in this year.
Meezan bank was on the front among the competition with a ratio of 0.229 in 2016. Bank Islami was in the second position with a ratio of 0.177 and Dubai Islamic bank on the third Position with a ratio of 0.097. In this year Meezan bank gross margin ratio was favourable because his customer prefers this bank for taking advance because they cannot charge the interest or Bank Islami loss his position in this year.
5.5 Return on Assets:
Return on Assets = Net Income / Total Average Assets.

Explanation:
Return on Assets is an indication to how company is linked towards its total assets. Return on Assets also gives a way to managers, shareholders like how a company utilize its assets economically to create profit. Return on Assets also verifies assets that are important or those that are not important for the company.
Table: Return on Assets:
2014 2015 2016
Bank Islami 16.01177082 37.9565039 14.466688
Meezan Islamic
Bank 14.36842105 13.0778443 10.619125
Dubai Islamic
Bank 7.098048327 9.90275527 5.0123052
857250topFigure 5
5.5.1 Trends Analysis:
This figure shows that the Bank Islami ROA was 16.011 in 2014 but there is a giant increase in 2015 in price earnings ratio. In 2016 this ratio has not improved as compared to 2015 and 2014.

Meezan Islamic bank ROA was 14.3610 in 2014 but there is a decrease in 2015 in price earnings ratio. In 2016 this ratio has not improved as compared to 2015 and 2014.

Dubai Islamic bank ROA was 7.098 in 2014 but there is a giant increase in 2015 in price earnings ratio. In 2016 this ratio has not improved as compared to 2015 and 2014.

5.5.2 Comparisons and Reasons:
Bank Islami was on the front among the competition with a ratio of 16.01 in 2014. Meezan bank was in the second position with a ratio of 14.36 and Dubai Islamic bank on the third Position with a ratio of 7.098. During this year the bank Islamic ROA is favourable because they famous among the people become of Islamic perspective or his noninterest income to total income ratio are better than all the banks that why they top of the list.
Bank Islami was on the front among the competition with a ratio of 37.95 in 2015. Meezan bank was in the second position with a ratio of 13.07 and Dubai Islamic bank on the third Position with a ratio of 9.902. During this year the bank Islamic ROA is favourable because they famous among the people become of Islamic perspective or his noninterest income to total income ratio are better than all the banks that why they top of the list.

Bank Islami was on the front among the competition with a ratio of 14.46 in 2016. Meezan bank was in the second position with a ratio of 10.61 and Dubai Islamic bank on the third Position with a ratio of 5.012. During this year the bank Islamic ROA is favourable because they famous among the people become of Islamic perspective or his noninterest income to total income ratio are better than all the banks that why they top of the list.

5.6 Asset Turnover Ratio:
Formula:
Total Asset Turnover Ratio = Net Sales / Average Total Assets
Explanation:
How exactly company utilize its assets to produce sale, know about how much sales produce by its assets and also know about operations of the company via Assets Turnover Ratio. Company use its assets in proper way if Assets Turnover Ratio is higher than its means while company cannot use its assets in right way if Assets Turnover Ratio is lower than its means.

Table: Assets Turnover Ratio
2014 2015 2016
Bank Islami 1.752002548 1.73211205 2
Meezan Islamic Bank 1.865452891 2.22282405 2.4415424
Dubai Islamic
Bank 2.190838356 2.13277412 2.2197429
Figure 6

5.6.1 Trend Analysis:
This figure shows that the Bank Islami asset turnover ratio of 2014 and 2015 are same. In 2016 this ratio has improved as compared to 2015 and 2014 or management work efficiency.

Meezan Islamic bank asset turnover ratio of 2014 is 1.865 or in 2015 this ratio increase as compare to 2014. In 2016 this ratio has improved as compared to 2015 and 2014 and management work efficiency.

Dubai Islamic bank asset turnover ratio of 2014 is increased as compared to 2015 or in 2015 ratio going down fall and In 2016 this ratio has improved as compared to 2015 and 2014 and management work efficiency.

5.6.2 Comparison and Reasons:
The Dubai Islamic bank was on the front among the competition with a ratio of 2.190 in 2014. Meezan bank was in the second position with a ratio of 1.865 and Bank Islami on the third Position with a ratio of 1.752. Dubai Islamic bank ratio is better than other 2 banks in this year because bank borrowing interest rate is more than other banks that means the bank lending rate is less than the bank borrowing rate.
Meezan bank was on the front among the competition with a ratio of 2.222 in 2015. The Dubai Islamic bank was in the second position with a ratio of 2.132 and Bank Islami on the third Position with a ratio of 1.732. In this year the Meezan bank ratio is greater than other two banks because bank borrowing interest rate is more than other banks that means the bank lending rate is less than the bank borrowing rate.
Meezan bank was on the front among the competition with a ratio of 2.2441 in 2016. The Dubai Islamic bank was in the second position with a ratio of 2.219 and Bank Islami on the third Position with a ratio of 2. In this year the Meezan bank ratio is greater than other two banks because bank borrowing interest rate is more than other banks that means the bank lending rate is less than the bank borrowing rate.
5.7 Fixed Assets Turnover Ratio:
Formula:
Fixed Assets Turnover Ratio = Net Sales / Average Fixed Assets
Explanation:
How a firm raise its sales due to fixed assets, evaluate whether the company consume its fixed assets in exact way to generate more sales or not and its study tells investors and creditors either they invest in the company or not these all things know via Fixed Assets Turnover Ratio. At which Point Company is able to use their plant equipment and property also measured via Fixed Assets Turnover Ratio.

Table : SEQ Table * ARABIC 3: Fixed Assets Turnover Ratio:
2014 2015 2016
Bank Islami 0.574172112 0.5737417 0.6707645
Meezan Islamic Bank 1.208005103 1.42611205 2.3294981
Dubai Islamic
Bank 0.334978491 0.90422762 0.2809117
Figure 7
457200129540
5.7.1 Trends Analysis:
Bank Islami fixed asset turnover ratio was 0.574 in 2014 but they also maintain this in 2015 in fixed asset turnover ratio. In 2016 this ratio has improved as compared to 2015 and 2014.

As shown above the Meezan Islamic bank fixed asset turnover ratio was 1.208 in 2014 but there is an increase in 2015 in fixed asset turnover ratio. In 2016 this ratio has improved as compared to 2015 and 2014.

In financial Year 2014 the Dubai Islamic bank debt to equity ratio was 0.334 but there is a giant increase in 2015 in debt to equity ratio. In 2016 this ratio has fallen down as compared to 2015 and 2014
5.7.2 Comparison and Reasons:
Meezan bank has a fixed asset turnover ratio of 1.208 which is higher as compared to bank Islami fixed asset turnover ratio of 0.574 and Dubai Islamic bank fixed asset turnover ratio of 0.334 in 2014.In this year Meezan bank fixed asset turnover ratio is not favourable because his debt is increase of equity. Bank Islami or Dubai Islamic bank fixed asset turnover ratio is good because his debt is decreasing from equity.
Meezan bank has a fixed asset turnover ratio of 1.426 which is higher as compared to Dubai Islamic bank fixed asset turnover ratio of 0.904 and Bank Islami fixed asset turnover ratio of 0.573 in 2015. During this year Meezan bank fixed asset turnover ratio is not favourable because his debt is increase of equity. Bank Islami or Dubai Islamic bank fixed asset turnover ratio is good because his debt is decreasing from equity.

Meezan bank has a fixed asset turnover ratio of 2.329 which is higher as compared to Bank Islami fixed asset turnover ratio of 0.670 and Dubai Islamic bank fixed asset turnover ratio of 0.280 in 2016. During this year Meezan bank fixed asset turnover ratio is not favourable because his debt is increase of equity. Bank Islami or Dubai Islamic bank fixed asset turnover ratio is good because his debt is decreasing from equity.

5.8 DuPont Formula:
Formula:
ROE = (Net Profit ÷ Revenue)*(Revenue ÷ Total Assets)*(Total Assets ÷ Equity)
Explanation:
DuPont formula is method to clarify how the business increases their returning for its investor and Shareholder. DuPont formula show regarding the return that business can bring in on its equity. Where the business efficient and where it needs to get better also take direction from the DuPont Formula.
Table: DuPont Formula
2014 2015 2016
Bank Islami 0.0199777 0.00864632 0.115773721
Meezan Islamic Bank 0.0808403 0.10354445 0.107580932
Dubai Islamic Bank 0.0432017 0.03222306 0.054340638
Figure 8

5.8.1 Individual Trends Analysis
This figure shows that the Bank Islami ROE was 0.019 in 2014 but there is a decrease in 2015 in ROE. In 2016 there is a giant increase in the ROE.

Meezan Islamic bank ROE was 0.080 in 2014 but there is a giant increase in 2015 in ROE. In 2016 this ratio was going to upward as compare to 2015 and 2014.

Dubai Islamic bank ROE was 0.043 in 2014 but there is decrease in 2015 in ROE. In 2016 this ratio was going to improve as compare to 2015 and 2014.

5.8.2 Comparison and Reasons:
Meezan bank has a ROE of 0.080 which is higher as compared to Dubai Islamic bank ROE of 0.043 and Bank Islami ROE of 0.019 in 2014. In this year the Meezan bank ratio is greater than other two banks because its borrowing rate is better than bank lending rate that’s they achieve the maximum customer interest in his bank.
Meezan bank has a ROE of 0.103 which is higher as compared to Dubai Islamic bank ROE of 0.032 and Bank Islami ROE of 0.008 in 2015. In this year the Meezan bank ratio is greater than other two banks because its borrowing rate is better than bank lending rate that’s they achieve the maximum customer interest in his bank.
Bank Islami has a ROE of 0.115 which is higher as compared to Meezan banking ROE of 0.107 and Dubai Islamic bank ROE of 0.054 in 2016. In this year the Bank Islami ratio is greater than other two banks because its borrowing rate is better than bank lending rate that’s they achieve the maximum customer interest in his bank.
5.9 Return on Capital Employed:
Formula:
Roce = Net Operating Profit ÷ {(Operating Assets – Operating Liabilities) + (Closing Assets – Closing Liabilities)} ÷ 2
Explanation:
How much the profit is making on every rupees of the capital employ to the shareholder’s is called ROCE. Principally the ROCE is long-standing ratios that discuss how good quality of the assets of business is performing. Those ratios consider good which ratios higher and also significant for Capital Intensive Industry. It’s interested in liabilities that are why ROCE is much better than ROE. ROCE is also a new version of ROE. ROCE can be considering as loss if they cannot exceeds the borrowing rate otherwise it will consider as good one. By the Average Based ROCE we create our results more accurate.

Table: Return on Capital Employed
2014 2015 2016
Bank Islami 1.592676976 0.11581188 0.0860337
Meezan Islamic Bank 0.26938038 0.20659288 0.2362463
Dubai Islamic Bank 0.227272357 0.22274467 0.2355455
Figure 9

5.9.1 Trends Analysis:
This figure shows that the Bank Islami ROCE has increased in 2014 as compared to 2015 and in 2015 there is a giant decrease in ROCE and in 2016 there is decreased as compared to 2015 and 2014.

Meezan Islamic bank ROCE has increased in 2014 as compared to 2015 and 2016 and in 2015 there is a decrease in ROCE and in 2016 there is increased as compared to 2015 but there is decreased as compared to 2014.
Dubai Islamic bank ROCE is same in two years which is 0.222. But there is small increase in 2016.

5.9.2 Comparison and Reasons:
Bank Islami was on the front among the competition with a ratio of 1.592 in 2014. Meezan bank was in the second position with a ratio of 0.269 and Dubai Islamic bank on the third Position with a ratio of 0.227. This year the Bank Islami ROCE is favourable because they follow the series very well that way his customer deposit and withdraw the cash in giant amount. Meezan bank or Dubai Islamic bank ROCE is unfavourable.

The Dubai Islamic bank was on the front among the competition with a ratio of 0.222 in 2015. Meezan bank was in the second position with a ratio of 0.206 and Bank Islami on the third Position with a ratio of 0.115. This year the Dubai Islamic bank ROCE is favourable because they follow the series very well that way his customer deposit and withdraw the cash in giant amount. Meezan bank or Bank Islami ROCE is unfavourable.

Dubai Islamic bank and Meezan bank are both on the front among the competition with a ratio of 0.236 in 2016 and Bank Islami on the second Position with a ratio of 0.086. This year the Meezan bank or Dubai Islamic bank ROCE is favourable because they follow the series very well that way his customer deposit and withdraw the cash in giant amount. Bank Islami ROCE is unfavourable.

Conclusion and Recommendations:Meezan Bank had a continually high net profit margin ratio as compared to other to banks reason behind this is a good increase in sales and controlled expenses. All the banks had increasing net profit margin ratio. Bank Islami had a very little decrease in the ratio in 2015 due to an increase in operating expense. Net Profit Margin can be increased by reducing the operational expenses and to focus on the customer satisfaction.

Return on Equity ratio tells us that how much profits are being made by a Bank with the investments of its shareholders. Meezan bank has shown a higher ratio than its competitors. The net income of the company boosted in 2016 which resulted in a very high increase in the Meezan bank ratio. The Dubai Islamic bank also had an increasing net income which resulted in its ratio increase. All three banks have an increasing return on equity (ROE). However, better results can be obtained by decreasing liabilities, increasing sales and profits and by better utilization of the assets.

Meezan bank had a continually higher Fixed Asset Turnover Ratio, reason for that is a higher Fixed Asset Turnover Ratio than the other two competing Banks. In all year Meezan bank Fixed Asset Turnover Ratio is not favourable because he cannot generate, the more cash to satisfy its Fixed Assets obligations, so first he generates the cash to meet his Fixed Assets obligations. Bank Islami or Dubai Islamic bank Fixed Asset Turnover Ratio is good because his debt is decreasing from equity or they focused on generating the cash.

Meezan bank had the highest operating margin ratio in 2014 because of its daily transaction or their account holders deposit the cash or withdraw the cash in giant amount. But another two years Bank Islami on top of the list of operating margin ratio. All three banks have a fluctuation operating margin ratio. However, better results can be obtained by an increase in income from operations, increase in non cash expense and decrease in non cash revenue.
Bank Islami ROCE is favourable in 2014 because they follow the sharia very well that way his customer deposit and withdraw the cash in giant amount. Meezan bank or Dubai Islamic bank ROCE is unfavourable. But another two years Meezan bank on top of the list of operating cash flow ratio. All three banks have a fluctuation ROCE. However, better results can be obtained by following the sharia of Islam and away from interest because it is haram in Islam.
In FY 2014, 2016 Meezan Bank Gross Margin ratio favourable because his customer prefers this bank for taking advance because they low charges the interest. But in 2015 Bank Islami improved himself or follow the series that way bank Islami top on the list. All three banks have a fluctuation Gross Margin ratio. How much this ratio increase it is favourable to the banks because people prefer that bank. They could do one thing they attract the customer for decreasing the interest rate.
Bank Islamic Gross Margin ratio is continually favourable because they famous among the people become of Islamic perspective or his noninterest income to total income ratio are better than all the banks that why they top on the list or other two banks improved him year by year. All three banks have an increasing price earnings ratio. How much they increase this ratio, they famous among the people become of the Islamic perspective.

The Dubai Islami bank ratio is greater than other two banks in 2014 because bank borrowing interest rate is more than other banks that means the bank lending rate is less than the bank borrowing rate. And another two years Meezan bank gone rise to the top. All three banks should decrease its expenses and increases its noninterest income so they spread ratio will improve.

The Meezan bank ratio is greater than other two banks in 2014 and 2015 because its borrowing rate is better than bank lending rate that’s they achieve the maximum customer interest in his bank. But in 2016 bank Islami improved himself. For improving this ratio banks need to increase their income and should decrease their operating expense so its gross spread ratio is increased.

BibliographyFoulke, R. A. Practical Financial Statement Analysis. New York: McGraw-Hill, Inc, 1968.

Adedeji, E.A. “A tool for measuring organizational performance using ratio analysis.” Research Journal of Finance and Accounting, 2014: 17.

Athanasoglou, Panayiotis, Sophocles Brissimis, and Mathias Delis. Bank-Specific, Industry-Specific and Macroeconomic Determinants of Bank Profitability. Athens: Journal of International Financial Markets, Institutions and Money, 2005.

Lev, B, and R. Thiagarajan. “Fundamental Information Analysis.” Journal of Accounting, 1993: 190-214.

Beaver, W. ” Financial Ratios As Predictors of Failure.” Journal of Accounting Research, 1966: 71-111.

Kosmidou, K., Tanna, S. And Pasiouras, F. Determinants of profitability of domestic UK commercial banks: panel evidence from the period 1995-2002.

The Professor Sudin Haron paper is published in the Global Journal of Finance and Economics. USA, Vol 1, No 1, March 2004
Meezan bank https://www.meezanbank.com/Bank Islami https://www.bankIslami.com.pk/
Dubai Islamic bank https://www.dibpak.com/Investopedia https://www.investopedia.com/Wikipedia https://www.wikipedia.org/

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