Financial Analysis †Abu Dhabi Islamic Bank and National Bank of Abu Dhabi

Financial Analysis – Abu Dhabi Islamic Bank and National Bank of Abu Dhabi Introduction Abu Dhabi Islamic Bank (ADIB) and National Bank of Abu Dhabi (NBAD) are two leading banking institutions based in the capital city of United Arab Emirates, Abu Dhabi.Advertising We will write a custom research paper sample on Financial Analysis – Abu Dhabi Islamic Bank and National Bank of Abu Dhabi specifically for you for only $16.05 $11/page Learn More This report comprises of a financial analysis of both banks while taking into consideration financial information in the past three financial years, i.e. 2009, 2010 and 2011. The financial analysis presented in this report includes, profitability ratios, liquidity ratios, leverage ratio and solvency ratios of the two banks. Overview of the Banks Abu Dhabi Islamic Bank was founded back in the year 1997 with the mission of conducting its operations in accordance with the Islamic principles as laid down under â€Å"Shariah Law† (Abu Dhabi Islamic Bank, 2011; Bloomberg, 2013). Nationa l Bank of Abu Dhabi was founded in the year 1968, and since then it has earned a great reputation not only in the region, but also in other parts of the world. Today, National Bank of Abu Dhabi is regarded as the largest financial institution in Abu Dhabi as far as its lending operations are concerned (National Bank of Abu Dhabi, 2011; Bloomberg, 2013). Financial Analysis Following is a comprehensive analysis of the financial position and performance of the companies selected in this report: Profitability Ratios Profitability ratios are determined in order to evaluate profitability of a business concern. Profitability ratios generally include, gross margin, operating margin, return on equity, return on investments, return on capital employed, etc. (Helfert, 2001; Siddiqui, 2006).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Following profitability ratios have been dete rmined for the banks selected for analysis in this report: Abu Dhabi Islamic Bank National Bank of Abu Dhabi 2009 2010 2011 2009 2010 2011 Return on Equity 1.51 % 12.62 % 13.48 % 14.77 % 15.27 % 14.05 % Return on Investment 0.12 % 1.36 % 1.55 % 1.53 % 1.74 % 1.45 % Net Profit Margin 7.26 % 43.68 % 44.31 % 60.72 % 61.16 % 56.96 % Source: (Abu Dhabi Islamic Bank, 2011; Abu Dhabi Islamic Bank, 2010; National Bank of Abu Dhabi, 2011; National Bank of Abu Dhabi, 2010; Bloomberg, 2013). The return on equity has increased significantly from 2009 to 2010 for Abu Dhabi Islamic Bank. The reason behind this substantial increase is the improvement in the bank’s earnings in 2010 and onwards. Moreover, since there is comparatively lower increase noted in total equity of the bank, and therefore, resulted in higher return on equity in 2010 and 2011. Similarly, for National Bank of Abu Dhabi the ratio has shown improvement from 2009 to 2010, but declined in 2011. The reason be hind these fluctuating trends noted in return on equity for National Bank of Abu Dhabi is fluctuations in net income during the past three years. Similar to the trends noted in return on equity for the two banks in the past three years the return on investment for the two banks showed similar trends. Also, net profit margin also followed similar patterns for both banks. Due to significant increase in revenues of Abu Dhabi Islamic Bank, the net income increased considerably, the impact of which has been ultimately depicted in the net profit margin during 2010 and 2011.Advertising We will write a custom research paper sample on Financial Analysis – Abu Dhabi Islamic Bank and National Bank of Abu Dhabi specifically for you for only $16.05 $11/page Learn More Liquidity Ratios The liquidity ratios determine the ability of a company to meet its short term borrowing obligations through its internal current sources. Liquidity ratios generally include current ratio, quick ratio, cash ratio and net working capital ratio (Helfert, 2001; Siddiqui, 2006). Following are the current and cash ratios determined for Abu Dhabi Islamic Bank and National Bank of Abu Dhabi for the past three financial years, i.e. 2009, 2010 and 2011. Abu Dhabi Islamic Bank National Bank of Abu Dhabi 2009 2010 2011 2009 2010 2011 Current Ratio 0.25 0.30 0.33 0.28 0.32 0.33 Cash Ratio 0.17 0.21 0.23 0.13 0.09 0.11 Source: (Abu Dhabi Islamic Bank, 2011; Abu Dhabi Islamic Bank, 2010; National Bank of Abu Dhabi, 2011; National Bank of Abu Dhabi, 2010; Bloomberg, 2013) As can be observed in the table above, there is no major difference noted in the current ratios of the two banks over the period of past three years. The current ratios of both banks have improved from 2009 onwards due to significant improvements noted in the current assets of both banks and a comparatively lower increase in the current liabilities, particularly short term borrowings by the ba nks. On the other hand, cash ratio for Abu Dhabi Islamic Bank has shown a similar trend in the past three years, whereas for National Bank of Abu Dhabi, the ratio has been observed as fluctuating during the past three years. In 2010, the cash ratio of the bank reached at its lowest point in the past three years, due to fall in cash and cash equivalent reserves.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Leverage Ratio The leverage ratio, such as debt to equity ratio, determines the extent to which a business entity’s operations and activities are reliant on debt financing as compared to equity financing. In other words, it also shows the extent of debt over equity in a business’ balance sheet (Helfert, 2001; Siddiqui, 2006). The gearing ratios for the two selected banks in this report are determined as follows for financial periods 2009, 2010 and 2011: Abu Dhabi Islamic Bank National Bank of Abu Dhabi 2009 2010 2011 2009 2010 2011 Gearing Ratio 1.44 0.58 0.79 0.58 0.94 0.74 Source: (Abu Dhabi Islamic Bank, 2011; Abu Dhabi Islamic Bank, 2010; National Bank of Abu Dhabi, 2011; National Bank of Abu Dhabi, 2010; Bloomberg, 2013) The gearing position of Abu Dhabi Islamic Bank has shown consistent fluctuations over the past three financial years. As for instance, in 2009, the gearing level of the bank is seen at its highest level due to increased preference for debt financing of banks operations rather than opting for equity financing. This situation changed significantly in 2010 due to a comparatively higher increase in equity of the bank as compared to increase in debt. However, the situation changed once again in 2011 due to significantly higher increase in debts of the bank in contrast to the increase in equity. On the other hand, gearing situation for National Bank of Abu Dhabi is completely opposite. The gearing level of National Bank of Abu Dhabi increased from 2009 to 2010 and then declined in 2011; the reason being about a 100 percent increase in debts of the bank and a low increase in equity level. In 2011, total debts slightly declined due to which gearing ratio also came down in comparison with the previous year. Solvency Ratios Solvency ratios determine the ability of a business enterprise to survive in future (Helfert, 2001; Siddiqui, 2006). Following are the solvency ratios determined for two banks for the past three financi al years: Abu Dhabi Islamic Bank National Bank of Abu Dhabi 2009 2010 2011 2009 2010 2011 Debt to Assets Ratio 0.92 0.89 0.88 0.90 0.89 0.90 Cash Flow to Debt Ratio 0.40 0.76 0.42 17.72 7.21 8.38 Source: (Abu Dhabi Islamic Bank, 2011; Abu Dhabi Islamic Bank, 2010; National Bank of Abu Dhabi, 2011; National Bank of Abu Dhabi, 2010; Bloomberg, 2013) The debt to assets ratio for Abu Dhabi Islamic Bank can be observed as declining during the past three years, but with small differences. The primary reason behind this decline is that the bank’s assets have increased, not in proportion to the increase in debt, which shows that there is less increase in assets due to debt. Similarly, for National Bank of Abu Dhabi, the ratio declined from 2009 to 2010, but improved in 2011. The reason for the decline is same as has been noted in case of Abu Dhabi Islamic Bank. On the other hand, cash flow to debt ratio for Abu Dhabi Islamic Bank increased in 2010, but came to the same level in 2011 as it was in 2009. The primary factor, which has resulted in fluctuation in this ratio, has been operating cash flows of the bank. On the other hand, cash flow to debt ratio for National Bank of Abu Dhabi has been noted as significantly lower than that of Abu Dhabi Islamic Bank. Moreover, the ratio has declined from 2009 to 2010, but slightly improved in 2011. The sharp decline in 2010 is due to significant increase in total debts of the bank. Conclusion From the financial ratio analysis of Abu Dhabi Islamic Bank and National Bank of Abu Dhabi’s financial statements for the financial years 2009, 2010 and 2011, it has been observed that there are varying trends and patterns in the past three years for both banks as far as their financial performance is concerned. The profitability ratios for the two banks have revealed that Abu Dhabi Islamic Bank has performed much better, as indicated by significant improvement in net income, as compared to National Bank of Abu Dhabi. On the other hand, the liquidity positions of the two banks have remained more or less similar in the three years period under consideration. As far as leverage positions of the two banks are concerned, it is concluded from the analysis that both have shown volatility in this respect. As has been noted, there is no particular pattern is followed in maintaining a certain gearing level by both banks. Moreover, the overall gearing level for both banks remained at high levels from 2009 to 2011, due to high levels of debt financing. Lastly, the review of solvency position of both banks concluded that the debt to assets ratio for both banks remained at the same level in the past three financial years, primarily due to the fact that the increase in debt and increase in assets for both banks remained proportionately similar. However, significant differences have been noted in cash flow to debt ratios as there have been significant differences in the operating cash flows of the two ba nks. Reference List Abu Dhabi Islamic Bank. (2010). Annual Report 2010. Abu Dhabi: Abu Dhabi Islamic Bank. Abu Dhabi Islamic Bank. (2011). Annual Report 2011. Abu Dhabi: Abu Dhabi Islamic Bank. Bloomberg. (2013). Abu Dhabi Islamic Bank (ADIB:Abu Dhabi). Bloomberg. Web. Bloomberg. (2013). National Bank Of Abu Dhabi (NBAD:Abu Dhabi). Bloomberg. Web. Helfert, E. A. (2001). Financial Analysis Tools and Techniques: A Guide for Managers. New York: McGraw-Hill. National Bank of Abu Dhabi. (2010). Annual Report 2010. Abu Dhabi: National Bank of Abu Dhabi. National Bank of Abu Dhabi. (2011). Annual Report 2011. Abu Dhabi: National Bank of Abu Dhabi. Siddiqui, S. A. (2006). Managerial Economics And Financial Analysis. New Delhi: New Age International Publishers.

How to Write a 1000 Word Essay

How to Write a 1000 Word Essay How to Write a 1000 Word Essay 1000 words? Really? How is it even possible? But it isn`t a tough question at all if you know exactly how to write such long essays. An essay is a thing of imagination and tedious work. You will easily achieve desired academic writing success if you have an understanding of the conventions of effective 1000-word essay writing. Just take a look at the common steps involved in successful top essay writing. Take Advantage of Effective Time Management Strategies A 1000-word essay is not something you will cope with in a matter of hours. So, it is essential to manage your time wisely and start writing as early as possible. Determine the time frames for topic analysis, planning, research and writing the first draft. Save enough time for proofreading and editing, formatting your essay in accordance with your university`s guidelines and reading it out loud. Choose a Topic to Write On Ask yourself a question – â€Å"What interests you most?†. Your essay will be bound to succeed if you are going to write on the subject that you are passionate about. Consider things you already know and check whether there are enough recourses on your topic. Make sure you understand your question fully. Generate as Many Ideas as You Can Now it is time to jot down your preliminary ideas that is to brainstorm. You should learn how to do it effectively. The most important thing is not to be scared of the brainstorming process. It is a great way to build a foundation of your paper. There is a plenty of brainstorming techniques that will help you make the writing process more enjoyable – listing, bulleting, cubing, webbing, mapping, clustering and outlining. Just be open-minded to the new thoughts. Start Researching Your Topic At this stage, you should apply all your research skills to explore your topic carefully. Explore encyclopedia, bibliographies, search journal indexes and electronic resources. Remember that internet searching is not always effective because not all publications are put online. Do not forget to take full bibliographic details of everything you read. Read critically and organize your notes in a neat way. Give a Pattern to Your 1000-Word Essay Introduction – approximately 100-200 words An effective and engaging introduction should introduce your topic and make your audience interested in it. It should include opening statements and a thesis statement. The introduction should be like a map for your readers – it should clearly show what your essay is about. Body paragraphs – approximately 800 words Each paragraph of the body of your essay should contain a topic sentence and reveal only one idea. You have to provide supporting evidence for every idea by giving examples, details, quotations, and facts. All sentences should be logically ordered. The main points of your essay should be smoothly and logically developed. Don`t forget to use different types of transitions (addition, comparison, emphasis, contrast, concession, clarification, restatement, concluding, summarizing) in order to show the connection between your ideas. Conclusion – approximately 100-200 words The first thing you should do when writing a conclusion is to restate your thesis statement. You can also explore the significance of your findings or any limitations of the approach you`ve taken. End your essay on a well-reasoned note. Don`t Neglect Editing and Proofreading First of all, edit for structure and argument. Make sure that your introduction gives your readers a clear understanding of your topic. Check whether all your paragraphs contribute to the main idea of your paper. Then edit for expression, grammar, and spelling. All sentences should be clear, concise and complete. They shouldn`t include any ambiguities. The sentence structure and vocabulary should be varied. Make sure that your essay is free from clichà ©s, jargon, slang, and colloquialisms. Correct all possible errors in typography, spelling, grammar, punctuation, and style.