A comparative study on solvency and profitability of United Finance Limited

Abstract

In the new competitive business era, NBFI is getting more competitive in Bangladesh. In this sector the most used financial statements are the balance sheet and profit and loss account where the balance sheet shows the financial position and profit and loss account shows the net profit or net loss of a NBFI. Solvency and profitability ratio analysis deals with these statements. NBFI is relatively new institution that is contributing toward the development of economy and it treated as an important service industry in modern world. Now days the concept of financial performance and research into its measurement is well advanced within finance and management fields. Financial statement analysis is defined as the process of identifying financial strengths and weaknesses of the firm. In this report there is a comparison of solvency and profitability of United Finance Limited with the other NBFIs of Bangladesh to know the position of United Finance Limited through ratio analysis and find out the difference with the industry average. This report also gives the concrete idea of a solvency and profitability of NBFI. Solvency and profitability through ratio analysis is the most popular trend to evaluate a NBFI’s performance over years or with other companies in an industry. NBFI’s profitability is a major concern in modern economy and profitability ratios of a NBFI show its overall efficiency and performance. These ratios represent the particular NBFI's ability to translate sales into profits at various stages of measurement, as well as represent its ability to measure the overall efficiency of the firm in generating returns for its shareholders. This analysis establishes relationship between the items of the balance sheet and the profit & loss account. In this report it describe the UFL’s financial statements for the last few years and also find out the industry average of other operating NBFIs of Bangladesh then analyze and focus significant comments regarding the changes in the financial position. Analysis and interpretation of these financial statements through ratio analysis has now become an important technique for performance appraisal because the investors, financial experts, management executives and the management of these NBFIs are always rely on these ratios to make important decisions.