Massive data overload could seem staggering. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Comparative ratio analysis helps you identify and quantify your company’s strengths and weaknesses, evaluate its financial position, and understand the risks you may be taking’ (Cerminaro 2005). [Online]
The key financial ratios of the banks are discussed in the following paragraphs. The ratios that are covered are the gross spread ratio, the net spread ratio, the capital adequacy ratio, the advances to deposits ratio, the sales to employee ratio the earnings per share, return on average equity for common stock holders, return on average assets and the price to earnings ratio. These ratios are split into two groups according to the basis of analysis i.e. banks’ perspective and investors’ perspective. The financial ratio analysis involves the calculation of various ratios which are provided in the following table:
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