View With Charts And Images
1.1 Introduction:
Non Banking Financial Institutions (NBFIs) represents one of the most important parts of a financial system. In, Bangladesh, NBFI’s are new in the financial system compared to bank companies. Beginning with HBFC (House Building Finance Corporation) in 1973, the number of NBFI’s in Bangladesh reached 28 by now. The NBFIs have extended their business in industrial, commercial and housing financing, and stock market activities and are active participants in the inter bank money market transactions. One important feature of NBFIs is the deployment of funds in the long term financing on a sustainable basis that is known as term financing .Another important feature is Lease financing.
1.1.1 Lease Financing:
Lease is a contract between the owner and the user of the asset s for a certain time period during which the second party uses an asset in exchange of making periodic rental payments to the first party without purchasing it. Under lease financing, the lessee regularly pays the fixed lease rent over a period of time at the beginning or at the end of a month, 3 months, 6 months or a year. At the end of a lease contract the asset reverts to the real owner.
1.1.2 Leasing in Bangladesh:
Leasing in Bangladesh, like in many of its peer countries, owes its origin to the efforts of the International Finance Corporation (IFC), Washington. At the instance of IFC, the first leasing company in Bangladesh, Industrial Development Leasing Company of Bangladesh (IDLC) was set up in 1984 and commenced its operation in 1986, with a 20% shareholding from Korea Development Leasing Corporation. For several years, IDLC remained the sole leasing company in Bangladesh. However, the real momentum began in the 1990s. The country’s central bank, Bangladesh Bank, put in place a regulatory mechanism under the Financial Institutions Act 1993 and the Financial Institutions Regulations 1994.In 1997, there were 15 leasing companies in the country. The function of lease business include lease financing, short- term financing, house building financing, and merchant banking and corporate financing. In this last group of functions, the leasing business in Bangladesh moved away from regular leasing activities and is now involved in stock- market related activities such as issue management, underwriting, trust management, private placement, portfolio management and mutual fund operation. Broad capital market operation s of the lease financing institutions include bridge financing, corporate counseling, mergers and acquisition, capital restructuring, financial engineering, and lease syndication. Prominent among the sectors of the economy that now receive lease financing services are textiles, apparels and accessories, transport, construction and engineering, paper and printing, pharmaceuticals, food and beverage, chemicals, agro based industries, telecommunications, and leather and leather products.
The selection of lease proposals is relatively free from extraneous pressure and is subject to a quality level appraisal. Under lease agreements in the private sector, projects are sanctioned and implemented expeditiously, resulting in benefits in time and cost savings. Private leasing companies also attract clients by providing relatively better services. The down payments in leasing are not high and the gestation period is low.
Leasing companies, however, face some problems in conducting their business in the country. The relatively slow growth of the demand side compared to the fast growth of the lease business is one such problem. This leads many leasing companies to operate in partial capacity. The culture of loan default that prevails in the country is also a deterrent. Leasing companies often find it difficult to raise funds through short-or long term borrowing from money and capital markets. They are hard pressed to deal with the financial assets because of the present laws of the country, which are also not fully enforceable.
Competition among the leasing companies has grown stronger with the growth of the NBFIs. So, NBFIs are today becoming increasingly concerned with the pursuit of goals and with their progress in achieving those goals. As, it is the time of competition, it is becoming increasingly difficult for them to cope with those goals they have set for themselves. New company’s entered into the market with new and innovative products to attract the customers, offer lower interest rate, high quality service. But market is not full of just threats; it offers huge opportunities also. Those NBFIs that could set its objectives in order to gain access to the opportunities by using its vision and could gather the necessary talents and back-up resources might be able to survive and become the best operator in the market.
Here, we want to make a comparative performance analysis of Union Capital Ltd with its major competitors Industrial Development Leasing Company of Bangladesh Limited (IDLC), United Leasing Company Limited and Uttara Finance Limited. The researcher here used ratio analysis technique to find out the ultimate result. Here the researcher has done Comparative Performance Analysis on the basis of:
a) Liquidity Analysis:
Current ratio
Debt Equity Ratio
Time Interest Earned Ratio
Financial Expenses Coverage Ratio
b) Operating Efficiency Analysis:
Account receivable Turnover ratio
Asset Turnover Ratio
Earning Per Share
Dividend pay-out ratio
c) Profit and Profitability Analysis:
Return on Asset (ROA)
Return on Equity (ROE)
Net Income ratio
d) Market Value Analysis:
Price Earning Ratio
e) Business Output Analysis:
Total Asset Position, Asset per Employee, Asset per Branch
Fixed Asset Position, Fixed Asset per Employee, Fixed Asset per Branch
Total Contract
Total disbursement
f) Employee productivity Analysis:
Operating Income, Operating Income per Employee, Operating Income per Branch
Operating Expense, Operating Expense per Employee, Operating Expense per Branch
Contract per Employee, Contract per Branch
Disbursement per Employee, Disbursement per Branch
1.2 Comparative Performance Analysis of Union Capital Limited with IDLC United Leasing Company Limited & Uttara Finance And Investment Limited:
1.2.1 Liquidity Analysis:
1.2.1.1 Current Ratio
This ratio helps to measure the short-term solvency because it provides an indicator of the extent to which the claims of short-term creditors are covered by assets that are expected to be converted to cash in a period roughly corresponding to the maturity of the claims.
The current ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
This ratio helps to measure the short-term solvency because it provides an indicator of the extent to which the claims of short-term creditors are covered by assets that are expected to be converted to cash in a period roughly corresponding to the maturity of the claims.
The current ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year |
UCL |
IDLC |
ULC |
Uttara Finance |
| 2002 | 0.67 | 1.1 | 1.1 | 0.5 |
| 2003 | 0.59 | 1.2 | 1.2 | 2.2 |
| 2004 | 2.4 | 1.1 | 1.3 | 1.2 |
| 2005 | 2.0 | 0.9 | 1.4 | 1.2 |
| 2006 | 1.4 | 0.8 | 0.9 | 1.1 |
Table 1: Current Ratio
Figure 1: Current Ratio
The current ratio graph resembles almost same condition for all the companies. In the FY 2002 current ratio of ULC & IDLC was in a better state to pay out its current obligation from current earning generating activity than UCL & Uttara finance. In the FY 2003 Uttara finance had increased their current ratio. IDLC & ULC also increased their current ratio but UCL faced a fall in that case. After that year UCL’s current ratio is in a high position compared to other company.
As the current ratio provides the best single indicator of the extent to which the claims of the short- term creditors are covered by assets that are expected to be converted to cash fairly quickly, in the year 2005, 2006 we can say that the liquidity position is somewhat weak in UCL. Still, because current assets are scheduled to be converted to cash in the near future, it is highly probable they could be liquidated at close to their stated value. Due to less current obligation current ratio of all the companies are also increasing year by year. This is a good indication for any company
Figure 1: Current Ratio
The current ratio graph resembles almost same condition for all the companies. In the FY 2002 current ratio of ULC & IDLC was in a better state to pay out its current obligation from current earning generating activity than UCL & Uttara finance. In the FY 2003 Uttara finance had increased their current ratio. IDLC & ULC also increased their current ratio but UCL faced a fall in that case. After that year UCL’s current ratio is in a high position compared to other company.
As the current ratio provides the best single indicator of the extent to which the claims of the short- term creditors are covered by assets that are expected to be converted to cash fairly quickly, in the year 2005, 2006 we can say that the liquidity position is somewhat weak in UCL. Still, because current assets are scheduled to be converted to cash in the near future, it is highly probable they could be liquidated at close to their stated value. Due to less current obligation current ratio of all the companies are also increasing year by year. This is a good indication for any company
1.2.1.2 Time Interest Earned Ratio
This ratio serves as one of the bank’s ability to meet its interest payments. In general the higher the ratio, the greater the likelihood that the company could cover its interest payments without difficulty.
The Time Interest Earned Ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
The Time Interest Earned Ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 1.12 | 1.33 | 2.05 | 1.71 |
| 2003 | 1.09 | 1.45 | 1.78 | 1.60 |
| 2004 | 1.46 | 1.49 | 1.96 | 1.69 |
| 2005 | 1.61 | 1.44 | 1.71 | 1.56 |
| 2006 | 1.33 | 1.26 | 1.38 | 1.95 |
Table 2: Time Interest Earned Ratio
Figure 2: Time Interest Earned Ratio
From the above figure it can be seen that ULC has the highest TIE ratio. So, its ability to meet its interest payments is quiet good than others though it has some ups and down over the year. Uttara finance is in second position. IDLC has its steady growth over the year. UCL has always kept their TIE ratio growing since 2002 except the year 2003. In this year UCL’s operating expenses were higher than its operating incomes. As a result the UCL didn’t have enough funds to pay their interest charges at full. Now in the year 2006 it sheds some light on UCL’s capacity to take on new debt as it is now in the position to cover annual interest with operating income. So UCL is in quiet safe position so far.
1.2.1.3 Debt Equity Ratio (times)
The Debt Equity ratio is computed by simply dividing the total debt (including current liabilities) of UCL to Shareholders’ Equity. A comparison of debt to equity ratio for a given company with that of similar one’s give us a general indication about the credit worthiness and financial risk of the firm.
The debt equity ratio of UCL, IDLC, and ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
Figure 2: Time Interest Earned Ratio
From the above figure it can be seen that ULC has the highest TIE ratio. So, its ability to meet its interest payments is quiet good than others though it has some ups and down over the year. Uttara finance is in second position. IDLC has its steady growth over the year. UCL has always kept their TIE ratio growing since 2002 except the year 2003. In this year UCL’s operating expenses were higher than its operating incomes. As a result the UCL didn’t have enough funds to pay their interest charges at full. Now in the year 2006 it sheds some light on UCL’s capacity to take on new debt as it is now in the position to cover annual interest with operating income. So UCL is in quiet safe position so far.
1.2.1.3 Debt Equity Ratio (times)
The Debt Equity ratio is computed by simply dividing the total debt (including current liabilities) of UCL to Shareholders’ Equity. A comparison of debt to equity ratio for a given company with that of similar one’s give us a general indication about the credit worthiness and financial risk of the firm.
The debt equity ratio of UCL, IDLC, and ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 6.8 | 7.1 | 6.0 | 2.4 |
| 2003 | 8.6 | 7.5 | 6.0 | 4.0 |
| 2004 | 3.6 | 7.6 | 5.9 | 2.8 |
| 2005 | 4.5 | 8.0 | 5.3 | 2.9 |
| 2006 | 5.2 | 9.3 | 5.7 | 1.8 |
Table 3: Debt equity ratio
Figure 3: Debt equity ratio
From the above figure we can see that the debt equity Ratio of IDLC was too much in 2006. In that year the creditors are providing 9.3 times of financing for each $ 1 provided by the shareholders’. Creditors would generally like this ratio to be low. So, it would experience difficulty with creditors because of an excessive debt- equity ratio. On the other hand, Uttara Finance & ULC have comparatively lowering their debt equity ratio over the year. Now, in case of UCL the debt equity Ratio was too much in 2003. In that year the creditors are providing 8 times of financing for each $ 1 provided by the shareholders’. After the year 2003, debt equity ratio is going to be decreased and in the year 2006 it is in quiet medium level. So, it would not experience that much difficulty with creditors compare to others.
1.2.1.4 Financial Expenses Coverage Ratio (times)
The Financial Expenses Coverage Ratio (times)ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
Figure 3: Debt equity ratio
From the above figure we can see that the debt equity Ratio of IDLC was too much in 2006. In that year the creditors are providing 9.3 times of financing for each $ 1 provided by the shareholders’. Creditors would generally like this ratio to be low. So, it would experience difficulty with creditors because of an excessive debt- equity ratio. On the other hand, Uttara Finance & ULC have comparatively lowering their debt equity ratio over the year. Now, in case of UCL the debt equity Ratio was too much in 2003. In that year the creditors are providing 8 times of financing for each $ 1 provided by the shareholders’. After the year 2003, debt equity ratio is going to be decreased and in the year 2006 it is in quiet medium level. So, it would not experience that much difficulty with creditors compare to others.
1.2.1.4 Financial Expenses Coverage Ratio (times)
The Financial Expenses Coverage Ratio (times)ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 1.3 | 1.6 | 2.2 | 2.1 |
| 2003 | 1.2 | 1.5 | 2.0 | 1.6 |
| 2004 | 1.4 | 1.6 | 2.2 | 1.7 |
| 2005 | 1.5 | 1.5 | 1.9 | 1.5 |
| 2006 | 1.3 | 1.3 | 1.4 | 1.5 |
Table 4: Financial Expenses Coverage Ratio
Figure 4: Financial Expenses Coverage Ratio
It can be seen that financial expenses has increased over the year 2002-2005 mainly because of liquidity crunch in the market during the first half of the year 2006 which resulted in borrowings from call market at a substantial high rate and overall increase of interest rate in the market. So, all the competitors have to face a lot of competition in the market. The company that manages borrowing at a low interest rate will win the market. From this viewpoint the performance of UCL is good and in the same level of IDLC.
1.2.2 Operating Efficiency Analysis:
Figure 4: Financial Expenses Coverage Ratio
It can be seen that financial expenses has increased over the year 2002-2005 mainly because of liquidity crunch in the market during the first half of the year 2006 which resulted in borrowings from call market at a substantial high rate and overall increase of interest rate in the market. So, all the competitors have to face a lot of competition in the market. The company that manages borrowing at a low interest rate will win the market. From this viewpoint the performance of UCL is good and in the same level of IDLC.
1.2.2 Operating Efficiency Analysis:
1.2.2.1 A/R Turnover Ratio
The A/R turnover ratio shows the quality of the firm’s receivables and how successful the firm is in its collections. The ratio tells us the number of times accounts receivables have been turned over (into Cash) during the year. The higher the turnover, the shorter the time between the operational revenue and cash collection.
The A/R turnover ratio of UCL, IDLC, and ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
The A/R turnover ratio of UCL, IDLC, and ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 5.62 | 5.62 | 6.71 | 3.91 |
| 2003 | 3.11 | 1.97 | 2.67 | 3.84 |
| 2004 | 2.28 | 1.83 | 4.08 | 1.72 |
| 2005 | 1.83 | 2.32 | 4.8 | 3.84 |
| 2006 | 2.09 | 3.10 | 2.73 | 3.91 |
Table 5: A/R turnover ratio
Figure 5: A/R turnover ratio
From the figure it can be seen that ULC had the highest A/R turnover Ratio in the year 2002.After that it has decreased. Now in the FY 2006 ULC’s A/R turnover Ratio is 2.73 which is quiet low than IDLC & Uttara Finance .On the other hand, IDLC faced a dramatically fall in case of cash collection from the year 2002-2004.In the FY 2006 it has increased it’s performance. Uttara finance has faced the same condition like IDLC. At last in case of UCL A/R turnover Ratio is in very good position in the year 2002.After that it has decreased gradually. That means, in these years the company cannot show its performance in case of cash collection. But, the matter of hope is that in the year 2006 A/R turnover ratio increased than the previous years. It is a good sign for the company.
Figure 5: A/R turnover ratio
From the figure it can be seen that ULC had the highest A/R turnover Ratio in the year 2002.After that it has decreased. Now in the FY 2006 ULC’s A/R turnover Ratio is 2.73 which is quiet low than IDLC & Uttara Finance .On the other hand, IDLC faced a dramatically fall in case of cash collection from the year 2002-2004.In the FY 2006 it has increased it’s performance. Uttara finance has faced the same condition like IDLC. At last in case of UCL A/R turnover Ratio is in very good position in the year 2002.After that it has decreased gradually. That means, in these years the company cannot show its performance in case of cash collection. But, the matter of hope is that in the year 2006 A/R turnover ratio increased than the previous years. It is a good sign for the company.
1.2.2.2 Asset Turnover Ratio
It measures the ability of the management team of any organization to employ assets effectively to generate revenue.
The Asset Turnover Ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 0.15 | 0.34 | 0.39 | 0.33 |
| 2003 | 0.15 | 0.13 | 0.13 | 0.32 |
| 2004 | 0.16 | 0.12 | 0.13 | 0.14 |
| 2005 | 0.13 | 0.12 | 0.13 | 0.15 |
| 2006 | 0.14 | 0.12 | 0.12 | 0.14 |
Table 6: Asset Turnover Ratio 
Figure 6: Asset Turnover Ratio
The graph shows that ULC had the highest asset turnover ratio in the year 2002 compared to other companies. Higher fixed asset turnover ratio indicates the effective use of the assets of the company to generate sales. After that it has faced a downward trend in the total asst turnover ratio. The management did not perform accordingly to generate maximum revenue by utilizing the total asset. IDLC has faced the same condition like ULC. In the FY 2005 Uttara Finance & UCL have the highest asset turnover ratio than other competitors. From the year 2002 UCL has faced a downward trend but in 2005 the ratio bar of UCL slightly moved to upward direction indicating that the company is trying to boost the ratio and is trying to use its asset efficiently.
Figure 6: Asset Turnover Ratio
The graph shows that ULC had the highest asset turnover ratio in the year 2002 compared to other companies. Higher fixed asset turnover ratio indicates the effective use of the assets of the company to generate sales. After that it has faced a downward trend in the total asst turnover ratio. The management did not perform accordingly to generate maximum revenue by utilizing the total asset. IDLC has faced the same condition like ULC. In the FY 2005 Uttara Finance & UCL have the highest asset turnover ratio than other competitors. From the year 2002 UCL has faced a downward trend but in 2005 the ratio bar of UCL slightly moved to upward direction indicating that the company is trying to boost the ratio and is trying to use its asset efficiently.
1.2.2.3 Earning Per Share
The earnings per share provide a direct measure of the returns flowing to the owners-that means its stockholder
The earnings per share of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
(Amount in Taka)
The earnings per share of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
(Amount in Taka)
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 21.33 | 80.7 | 37 | 77.50 |
| 2003 | 26.77 | 75.4 | 53 | 83.52 |
| 2004 | 22.06 | 89.3 | 73 | 132.01 |
| 2005 | 25.47 | 101.8 | 85 | 144.50 |
| 2006 | 18.74 | 103.4 | 59 | 95.54 |
Table 7: Earning per share
Figure 7: Earning per share
It is seen in the table that the performance of IDLC from the viewpoint of profitability is good as profitability level is good over the FY 2002-2006. Uttara Finance had the highest EPS in the year 2005 but it goes to 95.54 in the year 2006.ULC has faced the same condition like Uttara finance. Compare to these competitors UCL’s earning per share is too poor and is not satisfactory.
1.2.2.4 Dividend payout ratio
Dividend payout ratio is the ratio between dividend per share and earning per share. The ratio indicates the percentage of a company’s earnings that is paid out to shareholders. It could be cash dividend or stock dividend or both. A stock dividend is simply the payment of additional shares of common stock to shareholders. It represents nothing more than a bookkeeping shift within the shareholder’s equity account on the firm’s balance sheet.
The Dividend payout ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
The Dividend payout ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 84% | 37% | 45% | 32% |
| 2003 | 74% | 39% | 34% | 29% |
| 2004 | 81% | 39% | 27% | 18% |
| 2005 | 78% | 36% | 25% | 17% |
| 2006 | – | 37% | 33% | 31% |
Table 8: Dividend payout ratio
Figure 8: Dividend pay out ratio
Here we can see that UCL has the highest dividend pay out ratio from the year 2002-2006.In 2003 and 2004 it’s getting lower but it declares 84% dividend in 2006 which is the highest than the other competitors. This is an indication that the company’s earning increases to a new level and UCL is confident enough in increasing dividend as it feels it can maintain the increase in earnings. We can also say that highest dividend payout ratio of UCL indicates better cash position and overall liquidity of the company. Because dividend mainly represent a cash outflow. The greater the cash position and overall liquidity, the greater its ability to pay a dividend. Here we found that though IDLC is more profitable company but its ability to pay a dividend is lower than UCL. Because we found that its funds may not be liquid as it goes into fixed asset and permanent working capital. The management of such a company usually desires to maintain some liquidity cushion to give it financial flexibility and protection against uncertainty; it may be reluctant to jeopardize this position to pay a large dividend. The same explanation can be applied in case of ULC and Uttara finance.
1.2.2.5 Operating Income:
The Operating Income of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
(Figure in ’000)
Figure 8: Dividend pay out ratio
Here we can see that UCL has the highest dividend pay out ratio from the year 2002-2006.In 2003 and 2004 it’s getting lower but it declares 84% dividend in 2006 which is the highest than the other competitors. This is an indication that the company’s earning increases to a new level and UCL is confident enough in increasing dividend as it feels it can maintain the increase in earnings. We can also say that highest dividend payout ratio of UCL indicates better cash position and overall liquidity of the company. Because dividend mainly represent a cash outflow. The greater the cash position and overall liquidity, the greater its ability to pay a dividend. Here we found that though IDLC is more profitable company but its ability to pay a dividend is lower than UCL. Because we found that its funds may not be liquid as it goes into fixed asset and permanent working capital. The management of such a company usually desires to maintain some liquidity cushion to give it financial flexibility and protection against uncertainty; it may be reluctant to jeopardize this position to pay a large dividend. The same explanation can be applied in case of ULC and Uttara finance.
1.2.2.5 Operating Income:
The Operating Income of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
(Figure in ’000)
| Year | UCL | Growth rate (%) | IDLC | Growth rate (%) | ULC | Growth rate (%) | Uttara Finance | Growth rate (%) |
| 2002 | 224536 | 1,618,966 | 1,307,077 | 531,180 | ||||
| 2003 | 239384 | 6.61% | 698,490 | -56.86% | 553,392 | -57.66% | 313,308 | -41.02% |
| 2004 | 115118 | -51.91% | 785,923 | 12.52% | 617,622 | 11.61% | 433,893 | 38.49% |
| 2005 | 135106 | 17.36% | 975,811 | 24.16% | 678,428 | 9.85% | 637404 | 46.90% |
| 2006 | 198321 | 46.79% | 1,237,916 | 26.86% | 739,236 | 8.96% | 862,483 | 35.31% |
Table 9: Operating Income
Figure 9: Operating Income
We found that operating income of UCL decreased in the year 2004, after that it is in an increasing trend. Operating income of IDLC, ULC, Uttara Finance decreased in the year 2003. After that they can also increase their operating income position. In the year 2006 operating income of IDLC is the highest, Uttara Finance is in second position and ULC is in third position. UCL’s performance is quiet good than the previous years.
1.2.2.6 Operating Expenses:
The Operating Expense of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
(Figure in ’000)
Figure 9: Operating IncomeWe found that operating income of UCL decreased in the year 2004, after that it is in an increasing trend. Operating income of IDLC, ULC, Uttara Finance decreased in the year 2003. After that they can also increase their operating income position. In the year 2006 operating income of IDLC is the highest, Uttara Finance is in second position and ULC is in third position. UCL’s performance is quiet good than the previous years.
1.2.2.6 Operating Expenses:
The Operating Expense of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
(Figure in ’000)
| UCL | Growth rate (%) | IDLC | Growth rate (%) | ULC | Growth rate (%) | Uttara Finance | Growth rate (%) | |
| 2002 | 114566 | 1,420,277 | 1,095,825 | 445,675 | ||||
| 2003 | 226088 | 97.34% | 489,412 | -65.54% | 315472 | -71.21% | 212,557 | -52.31% |
| 2004 | 84859 | -62.47% | 589,625 | 20.48% | 331481 | 5.07% | 314,920 | 48.16% |
| 2005 | 94517 | 11.38% | 723,023 | 22.62% | 409627 | 23.57% | 423,234 | 34.39% |
| 2006 | 159858 | 69.13% | 1,015,480 | 40.45% | 576146 | 40.65% | 593,090 | 40.13% |
Table 10: Operating Expense
Figure 10: Operating Expense
Here we found that operating expenses of the companies is lower than the operating income.
1.2.3 Profit and Profitability Analysis:
Figure 10: Operating Expense
Here we found that operating expenses of the companies is lower than the operating income.
1.2.3 Profit and Profitability Analysis:
1.2.3.1 Return on Asset
Return on Asset measures the efficiency of assets used to generate income. Income from Operations excludes any expenses such as income taxes and financing charges.
The ROA ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
The ROA ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 2.69% | 2.52% | 2.33% | 5.89% |
| 2003 | 2.26% | 2.08% | 2.74% | 4.72% |
| 2004 | 3.94% | 2.10% | 3.31% | 5.24% |
| 2005 | 3.97% | 2.63% | 3.44% | 4.49% |
| 2006 | 2.56% | 2.53 % | 2.10% | 3.75% |
Table11: ROA
Figure 11: ROA
From the above figure we can see that Uttara Finance had the highest ROA in the FY 2002.In this year the company generated more profit by using the asset properly. After that it cannot keep consistency in generating sufficient profit and is becoming lower that is 3.75% in the year 2006 but is greater than other competitors.ULC shows its consistent performance over the year by using the asset properly. IDLC also shows its increasing trend from the FY 2003-FY 2006. The company invested more in leases and term finance and was able to generate sufficient profit to strengthen the ROA figure. In year 2004, 2005 the ROA of UCL is in very good position and the company generated more profit by using the asset properly. But in the year 2006 it has decreased as the company invested more in leases and term finance but it can not generate sufficient profit to strengthen the ROA figure yet. Compared to other competitors we can say that still UCL is in good position in case of generating profit.
1.2.3.2 Return on Equity (after Tax)
Return on Equity is a measure of the rate of returns flowing to the bank's shareholders. It approximates the net benefit the stockholder's receives from investing their capital in the bank.
The ROE ratio of UCL, IDLC, and ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
Table 12: ROE
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 16.23% | 24.26% | 15.46% | 37.37% |
| 2003 | 11.01% | 19.14% | 19.80% | 31.77% |
| 2004 | 23.84% | 18.77% | 23.02% | 38.19% |
| 2005 | 20.33% | 18.98% | 22.64% | 33.73% |
| 2006 | 15.17% | 17.45% | 13.76% | 23.57% |
Figure 12: ROEFrom the above figure it can be seen that Uttara Finance always maintained their ROE high than the competitors. A high return on equity often reflects the bank’s acceptance of strong investment opportunities and effective expense management.ROE position of IDLC & ULC decrease in the year 2006.They cannot effectively control their expenses and make a greater use of debt. In case of UCL it can be seen that in the year 2004 ROE is higher that is 24.34%.However, if the UCL has chosen to employ a level of debt that is high, a high ROE might simply be the result of assuming excessive financial risk. In the year 2005 & 2006 ROE is lowering down due to the company’s greater use of debt.
1.2.3.3 Net Income Ratio
The net profit margin reflects the effectiveness of expense management (cost control) and service pricing policies. It is the ratio of net income after taxes to total operational revenue.
The Net Income Ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the table:
The Net Income Ratio of UCL, IDLC, ULC, Uttara finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 18.54% | 7.32% | 5.87% | 17.50% |
| 2003 | 15.24% | 16.20% | 19.93% | 14.45% |
| 2004 | 25.43% | 17.04% | 24.90% | 36.50% |
| 2005 | 30.05% | 15.63% | 26.35% | 29.92% |
| 2006 | 18.25% | 12.70% | 16.66% | 25.82% |
Table 13: Net Income Ratio
Figure 13: Net Income Ratio
Since 2002 the net income ratio of Uttara Finance has been increasing which is a good sign for any company. The company’s net income is increasing in consecutive four years resembles that the mangers of this company has been able to reduce the expense that rises from the company’s day to day activity.UCL is in the second position among the competitors. So, we can say that UCL has better managerial ability to cope up with the adverse situation that occurs from day to day transaction. UCL was able to reduce their day to day transactional expenses by managing their operation in a cost effective manner.
1.2.4 Market Value Analysis:
1.2.4.1 Price earnings ratio:
Price earning ratio of UCL, ULC, IDLC, and Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
Figure 13: Net Income Ratio
Since 2002 the net income ratio of Uttara Finance has been increasing which is a good sign for any company. The company’s net income is increasing in consecutive four years resembles that the mangers of this company has been able to reduce the expense that rises from the company’s day to day activity.UCL is in the second position among the competitors. So, we can say that UCL has better managerial ability to cope up with the adverse situation that occurs from day to day transaction. UCL was able to reduce their day to day transactional expenses by managing their operation in a cost effective manner.
1.2.4 Market Value Analysis:
1.2.4.1 Price earnings ratio:
Price earning ratio of UCL, ULC, IDLC, and Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | n/a | 7.90% | 10.08% | 5.98% |
| 2003 | n/a | 8.53% | 6.45% | 5,74% |
| 2004 | n/a | 8.85% | 3.92% | 5.27% |
| 2005 | n/a | 7.27% | 4.11% | 2.90% |
| 2006 | n/a | 7.58% | 9.47% | 5.35% |
Table 14: price earning ratio
Figure 14: price earnings ratio
ULC has the highest price/earning ratio in 2006.IDLC is in second position and Uttara Finance is in third position. P/E ratio is higher for the firms with high growth prospects and lower for the riskier firms. So, ULC’s growth prospect is higher compare to others.
1.2.5 Business Output Analysis:
1.2.5.1 Total Asset:
Total asset of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
(Figure in ‘000)
Figure 14: price earnings ratio
ULC has the highest price/earning ratio in 2006.IDLC is in second position and Uttara Finance is in third position. P/E ratio is higher for the firms with high growth prospects and lower for the riskier firms. So, ULC’s growth prospect is higher compare to others.
1.2.5 Business Output Analysis:
1.2.5.1 Total Asset:
Total asset of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
(Figure in ‘000)
| UCL | Growth rate (%) | IDLC | Growth rate (%) | ULC | Growth rate (%) | Uttara Finance | Growth rate (%) | |
| 2002 | 652643 | 4828905 | 3737521 | 1823116 | ||||
| 2003 | 677997 | 3.88% | 5920661 | 22.61% | 4305560 | 15.20% | 2423002 | 32.90% |
| 2004 | 807126 | 19.05% | 6788496 | 14.66% | 4974446 | 15.54% | 3614049 | 49.16% |
| 2005 | 1218428 | 50.96% | 8798574 | 29.61% | 5418097 | 8.92% | 4863653 | 34.58% |
| 2006 | 1608695 | 32.03% | 11169870 | 26.95% | 6283863 | 15.98% | 6985534 | 43.63% |
Table 15: Total Asset
Figure 15: Total Asset
From the above figure we can see that IDLC has the highest level of total asset and it has an increasing trend from the year 2002-2006. ULC is in second position and Uttara Finance is in third position in terms of their asset position. They also face an increasing trend. In case of UCL though the asset level of them is lower compared to its competitors but according to their company size we can see that they are trying to boost up their asset position and following the increasing trend. So, there is a good indication that UCL can cover up their risks and all those liabilities with this asset level.
1.2.5.2 Asset per Employee:
Figure 15: Total Asset
From the above figure we can see that IDLC has the highest level of total asset and it has an increasing trend from the year 2002-2006. ULC is in second position and Uttara Finance is in third position in terms of their asset position. They also face an increasing trend. In case of UCL though the asset level of them is lower compared to its competitors but according to their company size we can see that they are trying to boost up their asset position and following the increasing trend. So, there is a good indication that UCL can cover up their risks and all those liabilities with this asset level.
1.2.5.2 Asset per Employee:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 65264 | 25415 | 101014 | 14944 |
| 2003 | 52153 | 28194 | 102513 | 17307 |
| 2004 | 40356 | 29515 | 105839 | 22588 |
| 2005 | 52975 | 35194 | 80867 | 26290 |
| 2005 | 69943 | 37232 | 73927 | 34928 |
Table 16: Asset per Employee
Figure16: Asset per Employee
From the figure we found that United Leasing Company has the highest asset level per employee basis, but it decreases over the year. But in case of IDLC and Uttara finance asset level per employee increases over the year. So, the employees of these two companies are comparatively in safe position. In case of UCL though it faces decreasing trend from the year 2002-2004 but after that UCL increases their asset level position on per employee basis which is higher than IDLC and Uttara Finance and Investment Company Limited.
1.2.5.3 Asset per Branch:
Figure16: Asset per Employee
From the figure we found that United Leasing Company has the highest asset level per employee basis, but it decreases over the year. But in case of IDLC and Uttara finance asset level per employee increases over the year. So, the employees of these two companies are comparatively in safe position. In case of UCL though it faces decreasing trend from the year 2002-2004 but after that UCL increases their asset level position on per employee basis which is higher than IDLC and Uttara Finance and Investment Company Limited.
1.2.5.3 Asset per Branch:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 652643 | 4828905 | 1868760 | 1823116 |
| 2003 | 677997 | 2960330 | 2152780 | 2423002 |
| 2004 | 807126 | 1697124 | 2487223 | 3614049 |
| 2005 | 609214 | 1466429 | 1806032 | 4863653 |
| 2006 | 804347 | 1396233 | 1256772 | 3492767 |
Table 17: Asset per Branch
Figure 17: Asset per Branch
From the above figure we got a mixed picture. Only UCL and Uttara Finance in the above figure keep their steady growth over the year and their asset level per branch basis is quiet good than ULC and IDLC. Here we found that UCL & Uttara Finance has 2 branches which are currently operating in Dhaka and Chittagong. On the other hand IDLC has 8 branches and ULC has 5 branches all over the country. According to the number of branches in the country IDLC and ULC cannot generate that much asset per branch basis.
1.2.5.4 Fixed Asset:
Total asset of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
| Year | UCL | Growth rate (%) | IDLC | Growth rate (%) | ULC | Growth rate (%) | Uttara Finance | Growth rate (%) |
| 2002 | 1644 | 10,623 | 12,140 | 4,205 | ||||
| 2003 | 1764 | 7.30% | 30,201 | 184.30% | 12,662 | 4.30% | 22,382 | 432.27% |
| 2004 | 1839 | 4.25% | 35,234 | 16.67% | 16,296 | 28.70% | 22,483 | 0.45% |
| 2005 | 1742 | -5.27% | 57,622 | 63.54% | 17,443 | 7.04% | 25,663 | 14.14% |
| 2006 | 3499 | 100.86% | 169,486 | 194.13% | 19,916 | 14.18% | 45,081 | 75.67% |
Table 18: Fixed Asset (figure in’000)
Figure 18: Fixed Asset (figure in’000)
Above figure shows that IDLC has highest fixed asset level. This is a big strength for them. But on the other hand we can say that most of their funds may go into fixed asset and permanent working capital. So, they may not be liquid that much which is very important for a company. Uttara finance is in second position and ULC is in third position. Compared to their fixed asset level position UCL has the lowest one.
1.2.5.5 Fixed Asset Per Employee:
Figure 18: Fixed Asset (figure in’000)
Above figure shows that IDLC has highest fixed asset level. This is a big strength for them. But on the other hand we can say that most of their funds may go into fixed asset and permanent working capital. So, they may not be liquid that much which is very important for a company. Uttara finance is in second position and ULC is in third position. Compared to their fixed asset level position UCL has the lowest one.
1.2.5.5 Fixed Asset Per Employee:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 164 | 56 | 328 | 34 |
| 2003 | 135 | 144 | 301 | 159 |
| 2004 | 91 | 153 | 347 | 140 |
| 2005 | 75 | 230 | 260 | 139 |
| 2006 | 152 | 564 | 234 | 225 |
Table 19: Fixed Asset per Employee
Figure 19: Fixed Asset per Employee
Above figure shows that IDLC has the highest fixed asset per employee in the year 2006. It maintains increasing trend from the year 2002-2006.ULC and Uttara Finance is the second and third respectively.UCL has the lowest fixed asset position compared to other competitors.
1.2.5.6 Fixed Asset per branch:
Figure 19: Fixed Asset per Employee
Above figure shows that IDLC has the highest fixed asset per employee in the year 2006. It maintains increasing trend from the year 2002-2006.ULC and Uttara Finance is the second and third respectively.UCL has the lowest fixed asset position compared to other competitors.
1.2.5.6 Fixed Asset per branch:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 1644 | 10,623 | 6,070 | 4,205 |
| 2003 | 1764 | 15,100 | 6,331 | 22,382 |
| 2004 | 1839 | 8,808 | 8,148 | 22,483 |
| 2005 | 871 | 9,603 | 5,814 | 25,663 |
| 2006 | 1166 | 21,185 | 3,983 | 22,540 |
Table 20: Fixed Asset per branch
Figure 20: Fixed Asset per branch
According to branch basis Uttara Finance has the highest fixed asset position per branch and UCL has the lowest fixed asset position per branch.
1.2.5.7 Total contract:
Total contract (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table: (Figure in ‘000)
Figure 20: Fixed Asset per branch
According to branch basis Uttara Finance has the highest fixed asset position per branch and UCL has the lowest fixed asset position per branch.
1.2.5.7 Total contract:
Total contract (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table: (Figure in ‘000)
| Year | UCL | Growth rate (%) | IDLC | Growth rate (%) | ULC | Growth rate (%) | Uttara Finance | Growth rate (%) |
| 2002 | 252,000 | 140,565 | 1,622,104 | 905,718 | ||||
| 2003 | 312,380 | 23.96% | 173,232 | 23.23% | 1,866,643 | 15.07% | 1,222,340 | 34.95% |
| 2004 | 398,800 | 27.67% | 209,267 | 20.80% | 2,306,308 | 23.55% | 2,013,010 | 64.68% |
| 2005 | 631,143 | 58.26% | 262,532 | 25.45% | 2,809,257 | 21.80% | 2,542,907 | 26.32% |
| 2006 | 1,181,519 | 87.20% | 2,284,626 | 770.22% | 2,684,534 | (4.43)% | 2,781,505 | 9.38% |
Table 21: Total contract
Figure 21: Total contract
We found that ULC has the highest contract level over the year 2002-2005.But in the year 2006 the contract level falls slightly. Uttara finance is in second position and performs very well over the year. IDLC get more contract in 2006.Compared to them UCL keep their steady growth trend over the year 2002-2006.
1.2.5.8 Total disbursement:
Total disbursement (Lease, Term Finance) of UCL, ULC, IDLC, and Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
Figure 21: Total contractWe found that ULC has the highest contract level over the year 2002-2005.But in the year 2006 the contract level falls slightly. Uttara finance is in second position and performs very well over the year. IDLC get more contract in 2006.Compared to them UCL keep their steady growth trend over the year 2002-2006.
1.2.5.8 Total disbursement:
Total disbursement (Lease, Term Finance) of UCL, ULC, IDLC, and Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
| Year | UCL | Growth rate (%) | IDLC | Growth rate (%) | ULC | Growth rate (%) | Uttara Finance | Growth rate (%) |
| 2002 | 209,570 | 120,500 | 1,132,404 | 830,104 | ||||
| 2003 | 299,790 | 43.05% | 123,222 | 2.25% | 1,322,564 | 16.79% | 1,122,858 | 35.26% |
| 2004 | 311,320 | 3.84% | 188,190 | 52.72% | 1,788,980 | 35.26% | 1,172,906 | 4.45% |
| 2005 | 514,906 | 65.39% | 211,363 | 12.31% | 2,356,756 | 31.73% | 1,762,106 | 50.23% |
| 2006 | 712,453 | 38.36% | 1,189,626 | 462.83% | 2,478,626 | 5.17% | 2,527,809 | 43.45% |
Table 22: Total disbursement
Figure 22: Total disbursement
This figure shows the growing disbursement trend of UCL according to the contract. So, they keep their efficiency and effectiveness in providing services.
1.2.6 Employee Productivity Analysis:
1.2.6.1 Operating Income per Employee:
Operating Income per Employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
Figure 22: Total disbursement
This figure shows the growing disbursement trend of UCL according to the contract. So, they keep their efficiency and effectiveness in providing services.
1.2.6 Employee Productivity Analysis:
1.2.6.1 Operating Income per Employee:
Operating Income per Employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 22453 | 8521 | 35326 | 4354 |
| 2003 | 18414 | 3326 | 13176 | 2238 |
| 2004 | 5756 | 3417 | 13141 | 2712 |
| 2005 | 5874 | 3903 | 10126 | 3445 |
| 2006 | 8623 | 4126 | 8697 | 4312 |
Table 23: Operating Income per Employee
1.2.6.2 Operating Income per Branch:
Here we can see that in the year 2002 UCL and ULC had the highest operating income per employee. After that it’s getting lower. On the other hand IDLC and Uttara Finance have the per employee basis operating ratios that are comparatively lower than UCL and ULC.
Figure 23: Operating Income per Employee
Operating Income per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in
the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
1.2.6.2 Operating Income per Branch:
Here we can see that in the year 2002 UCL and ULC had the highest operating income per employee. After that it’s getting lower. On the other hand IDLC and Uttara Finance have the per employee basis operating ratios that are comparatively lower than UCL and ULC.
Figure 23: Operating Income per Employee
Operating Income per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in
the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 224536 | 1618966 | 653538 | 531180 |
| 2003 | 239384 | 349245 | 276696 | 313308 |
| 2004 | 115118 | 196480 | 308811 | 433893 |
| 2005 | 67553 | 162635 | 226143 | 637404 |
| 2006 | 66107 | 154739 | 147847 | 431241 |
Table 24: Operating Income per Branch
Figure 24: Operating Income per Branch
In 2006 Uttara Finance has the highest operating income per branch. In this case UCL’s performance is not good.
1.2.6.3 Operating Expenses per employee:
Operating expense per Employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
Figure 24: Operating Income per Branch
In 2006 Uttara Finance has the highest operating income per branch. In this case UCL’s performance is not good.
1.2.6.3 Operating Expenses per employee:
Operating expense per Employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 11456 | 7475 | 29617 | 3653 |
| 2003 | 17391 | 2330 | 7511 | 1518 |
| 2004 | 4243 | 2563 | 7053 | 1968 |
| 2005 | 4109 | 2892 | 6114 | 2287 |
| 2006 | 6950 | 3385 | 6778 | 2965 |
Table 25: Operating Expenses per employee
Figure 25: Operating Expenses per employee
UCL’s operating expenses per employee is getting lower from the year 2003. So, we found that UCL’s operating income is more than operating expenses. It is a good sign for the company.
1.2.6.4 Operating Expenses per branch:
Operating expense per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
Figure 25: Operating Expenses per employee
UCL’s operating expenses per employee is getting lower from the year 2003. So, we found that UCL’s operating income is more than operating expenses. It is a good sign for the company.
1.2.6.4 Operating Expenses per branch:
Operating expense per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, and 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 114566 | 1420277 | 547912 | 445675 |
| 2003 | 226088 | 244706 | 157736 | 212557 |
| 2004 | 84859 | 147406 | 165740 | 314920 |
| 2005 | 47258 | 120504 | 136542 | 423234 |
| 2006 | 53286 | 126935 | 115229 | 296545 |
Table 26: Operating Expenses per branch
Figure 26: Operating Expenses per branch
IDLC’s per branch operating expenses is highest in 2002.After that it’s getting lower. In 2006, per branch basis operating expenses is highest for Uttara Finance, and then comes IDLC and ULC. The lowest one is UCL.
1.2.6.5 Contract per employee:
Total contract per employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
Figure 26: Operating Expenses per branch
IDLC’s per branch operating expenses is highest in 2002.After that it’s getting lower. In 2006, per branch basis operating expenses is highest for Uttara Finance, and then comes IDLC and ULC. The lowest one is UCL.
1.2.6.5 Contract per employee:
Total contract per employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 25,200 | 740 | 811,052 | 7,424 |
| 2003 | 24,029 | 825 | 622,214 | 8,731 |
| 2004 | 19,940 | 910 | 576,577 | 12,581 |
| 2005 | 27,441 | 1,050 | 561,851 | 13,745 |
| 2006 | 51,370 | 7,615 | 447,422 | 13,908 |
 2006 |
51,370 | 7,615 | 447,422 |
|
Figure 27: contract per employee
UCL get the highest contract per employee.UCL is in second position. After that there comes Uttara Finance and IDLC.
1.2.6.6 Contract per branch:
Total contract per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
UCL get the highest contract per employee.UCL is in second position. After that there comes Uttara Finance and IDLC.
1.2.6.6 Contract per branch:
Total contract per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 252,000 | 140,565 | 811,052 | 905,718 |
| 2003 | 312,380 | 86,616 | 933,321 | 1,222,340 |
| 2004 | 398,800 | 52,316 | 1,153,154 | 2,013,010 |
| 2005 | 315,571 | 43,755 | 936,419 | 2,542,907 |
| 2006 | 590,759 | 285,578 | 536,906 | 1,390,752 |
Table 28: contract per branch
Figure 28: contract per branch
Uttara Finance and Investment Limited got the highest contract per branch basis in 2005.But in the year 2006, contract amount is getting lower.ULC faces the same condition. IDLC get sudden increase in its contract trend in the year 2006. Only UCL has a steady growing trend in its contract amount.
1.2.6.7 Disbursement per employee:
Total disbursement per employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002,2003, 2004, 2005, 2006) is depicted in the following table:
Figure 28: contract per branch
Uttara Finance and Investment Limited got the highest contract per branch basis in 2005.But in the year 2006, contract amount is getting lower.ULC faces the same condition. IDLC get sudden increase in its contract trend in the year 2006. Only UCL has a steady growing trend in its contract amount.
1.2.6.7 Disbursement per employee:
Total disbursement per employee (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002,2003, 2004, 2005, 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 20,957 | 634 | 30,605 | 6,804 |
| 2003 | 23,060 | 587 | 31,489 | 8,020 |
| 2004 | 15,566 | 818 | 38,063 | 7,330 |
| 2005 | 22,387 | 846 | 35,175 | 9,524 |
| 2006 | 30,976 | 3,965 | 29,160 | 12,639 |
Table 29: Disbursement per employee
Figure 29: Disbursement per employee
Figure shows that disbursement per employee is good in UCL compared to the other competitors.
1.2.6.8 Disbursement per branch:
Total disbursement per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
Figure 29: Disbursement per employee
Figure shows that disbursement per employee is good in UCL compared to the other competitors.
1.2.6.8 Disbursement per branch:
Total disbursement per branch (Lease, Term Finance) of UCL, ULC, IDLC, Uttara Finance in the last five years (2002, 2003, 2004, 2005, 2006) is depicted in the following table:
| Year | UCL | IDLC | ULC | Uttara Finance |
| 2002 | 209570 | 120500 | 566202 | 830104 |
| 2003 | 299790 | 61611 | 661282 | 1122850 |
| 2004 | 311320 | 47047 | 894490 | 1172906 |
| 2005 | 257453 | 35227 | 785585 | 1762106 |
| 2006 | 356226 | 148703 | 495725 | 1263904 |
Table 30: Disbursement per branch
Figure 30: Disbursement per branch
Uttara Finance and Investment Limited has the highest disbursement per branch and IDLC has the lowest one.UCL has 2 branches in present and from the year 2002-2004 disbursement per branch basis has increased. In the year 2005 disbursement amount is getting lower due to lower contract amount. But after that it is increasing in full phase.
1.2.7 Sector wise disbursement of UCL, IDLC, Uttara Finance, United Leasing:
1.2.7.1 Sector wise disbursement of UCL in 2006:
Figure 30: Disbursement per branch
Uttara Finance and Investment Limited has the highest disbursement per branch and IDLC has the lowest one.UCL has 2 branches in present and from the year 2002-2004 disbursement per branch basis has increased. In the year 2005 disbursement amount is getting lower due to lower contract amount. But after that it is increasing in full phase.
1.2.7 Sector wise disbursement of UCL, IDLC, Uttara Finance, United Leasing:
1.2.7.1 Sector wise disbursement of UCL in 2006:
| Sector wise Disbursement | (%) | Sector wise Disbursement | (%) |
| Chemicals | 4.73% | Service (Institutional) | 10.83% |
| Engineering | 7.38% | IT | 1.54% |
| Petroleum/Power | 2.79% | Food & Beverage | 7.11% |
| Garments & Accessories | 8.12% | Cosmetics & Toiletries | 0.00% |
| Pharmaceuticals | 0.08% | Professional | 2.16% |
| Packaging | 1.23% | Transport (Commercial) | 17.57% |
| Leather | 0.13% | Textile | 30.85% |
| Others | 5.50% |
Table 31: Sector wise disbursement of UCL in 2006
Figure 31: Sector wise disbursement of UCL in 2006
1.2.7.2 Sector wise disbursement of IDLC in 2006:
Figure 31: Sector wise disbursement of UCL in 2006
1.2.7.2 Sector wise disbursement of IDLC in 2006:
| Sector wise Disbursement | (%) | Sector wise Disbursement | (%) |
| Textile | 13.42% | Agro Based Industries | 5.12% |
| Food & beverage | 8.13% | Apparels & Accessories | 4.19% |
| Financial services | 11.12% | Pharmaceuticals | 5.00% |
| Building & construction | 9.20% | Tele Communication | 4.36% |
| Services | 8.13% | Household Products & Home Appliances | 4.55% |
| Packaging | 6.11% | Housing & Real Estate | 4.42% |
| Iron & steel | 5.13% | Information Technology | 3.23% |
| Power & Energy | 5.00% | Education | 1.11% |
| others | 1.44% |
Table 32: Sector wise disbursement of IDLC in 2006
Figure 32: Sector wise disbursement of IDLC in 2006
1.2.7.3 Sector wise disbursement of Uttara Finance in 2006:
Figure 32: Sector wise disbursement of IDLC in 2006
1.2.7.3 Sector wise disbursement of Uttara Finance in 2006:
| Sector wise Disbursement | (%) | Sector wise Disbursement | (%) |
| Chemicals | 8.23%% | Service (Institutional) | 11.26% |
| Engineering | 4.02% | IT | 1.44% |
| Petroleum/Power | 2.26% | Food & Beverage | 8.20% |
| Garments & Accessories | 8.33% | Cosmetics & Toiletries | 0.00% |
| Pharmaceuticals | 0.07% | Leather | 0.12% |
| Professional | 2.11% | Transport (Commercial) | 19.32% |
| Packaging | 1.19% | Others | 3.00% |
| Textile | 30.45% |
Table 33: Sector wise disbursement of Uttara Finance in 2006
Figure 33: Sector wise disbursement of Uttara Finance in 2006
1.2.7.4 Sector wise disbursement of ULC in 2006:
Figure 33: Sector wise disbursement of Uttara Finance in 2006
1.2.7.4 Sector wise disbursement of ULC in 2006:
| Sector wise Disbursement | (%) |
| Textiles | 20% |
| Chemicals | 13% |
| Other Manufacturing | 24% |
| Services | 31% |
| All others | 12% |
Table 34: Sector wise disbursement of ULC in 2006
Figure 34: Sector wise disbursement of ULC in 2006
From the above chart we have found that IDLC has the highest disbursement in different sector. They have disbursed their fund in different segments efficiently and effectively which others cannot do.
1.3 Major Findings:
We have found some major findings from the analysis which can help to predict the performance of Union Capital Limited. These are:
Liquidity Analysis:
The current ratio provides the best single indicator of the extent to which the claims of the short- term creditors are covered by assets that are expected to be converted to cash fairly quickly. In the year 2005, 2006 we can see that the liquidity position is somewhat weak in UCL than the other competitors. Still, because current assets are scheduled to be converted to cash in the near future, it is highly probable they could be liquidated at close to their stated value.
UCL’s TIE ratio is also in quiet safe position in the year 2006.
UCL has too much debt equity Ratio in 2003.After the year 2003, debt equity ratio is going to be decreased and in the year 2006 it is in quiet medium level. So, it would not experience that much difficulty with creditors compare to others.
The performance of UCL is good in terms of financial expenses coverage and is in the same level of IDLC. The company can manages borrowing at a low interest rate from the market with its competitors.
So from the above analysis we can say that overall liquidity position of UCL is good
UCl’s earning per share is too poor compared to other competitors. But UCL has the highest dividend pay out ratio from the year 2002-2006. This is an indication that the company’s earning increases to a new level and UCL is confident enough in increasing dividend as it feels it can maintain the increase in earnings. We can also say that highest dividend payout ratio of UCL indicates better cash position and overall liquidity of the company.
So, we can say that UCL is trying to operate efficiently.
Profit and Profitability Analysis:
In the year 2006 ROA ratio of UCL has decreased as the company invested more in leases and term finance. We have seen from the above analysis that A/R turnover ratio is slightly increased than the previous year but it can not generate sufficient profit to strengthen the ROA figure. Compared to other competitors we can say that still UCL is in good position in case of generating profit.
In case of UCL it can be seen that in the year 2004 ROE is higher that is 24.34%.However, if the UCL has chosen to employ a level of debt that is high, a high ROE might simply be the result of assuming excessive financial risk. In the year 2005 & 2006 ROE is lowering down due to the company’s greater use of debt.
UCL has better managerial ability to cope up with the adverse situation that occurs from day to day transaction. UCL was able to reduce their day to day transactional expenses by managing their operation in a cost effective manner.
So, we can say that UCL’s profitability position is not that much good compared to other competitors. Though its liquidity position is good but due to its poor ROA and above average debt it can not generating that much profit.
Business Output Analysis:
In case of UCL though the asset level of them is lower compared to its competitors but according to their company size we can see that they are trying to boost up their asset position and following the increasing trend. So, there is a good indication that UCL can cover up their risks and all those liabilities with this asset level. It’s per employee and per branch basis asset position also good than ULC and IDLC. But the Fixed asset position per employee and per branch basis lower than others.
Compared to others UCL keep their steady growth trend in case of contract and disbursement over the year 2002-2006. So, they keep their efficiency and effectiveness in providing services.
Employee Productivity Analysis:
UCL’s operating income per employee is more than its operating expenses. The company’s per employee basis contract and disbursement are also good.
So, we can say that productivity level of the UCL’s employees is very good and they can effectively meet up their expenses with their profit level.
Sector wise Disbursement:
We found that sector wise disbursement level of UCL is good than the other competitors and they prove their efficiency in these field. But still there are some sectors that are uncultivated by them. So, they have to find out the prominent sector in which they can build up their business.