Ace Financial Ratio Analysis For Bank Loan
Solvency ratios are ratios that tell us whether the bank is a healthy long-term business or not.
Financial ratio analysis for bank loan. An analysis will show a ratio analysis of Elm bank Ltd between the years 2012-2013 and whether it is worth to invest in the company or not Petzke et al 2010. NbspRatio analysis is a comparison of relationship between financial statements to help analyze the financial position of a business Keršuliene et al 2010. It is calculated by dividing the amount of loans by the amount of assets deposits at a bank.
Net interest income in blue totaled 446 billion for 2017 and is the. The higher the loanassets ratio the more risky the bank. Fundamentally in this ratio the banker is determining how much wiggle room they have in.
For example a company that has 100000 in assets but only 50000 in debt is a better risk than a business that has 100000 in assets and 75000 in debt. It will also help to know its ability to repay the loan. A good ratio here is the Loans to Assets ratio.
Total interest earned was 575 billion in green for the bank from their loans and all investments and cash positions. This provides some assurance to the lending institution in. Loan to deposit is the most important ratio to measure the liquidity condition of the bank.
Tools of Financial Analysis. In the analysis of financial statements the analyst has a variety of tools available to choose the best that suits his specific purpose. Higher the ratio the less liquid the bank is.
The term financial statements refers to balance sheets profit and loss or income statements. Financial Ratio Analysis Financial ratios provide a means of measuring the overall health of a business. Moreover financial ratios help a banker to assess the degree of risk being taken.