Banks provide investment facilities to its customers How-01273
This subjective question is related to the book/course
vu eng201 Business and Technical English Writing.
It can also be found in
vu eng201 Mid Term Solved Past Paper No. 1.
Question 1: Banks provide investment facilities to its customers. How customers can judge the management soundness and profitability of the banks?
Answer:
The financial statements of the banks are not easy for everyone to interpret. As a result in order to judge the management soundness what one can do is check the various operational and profitability ratios of the concerned banks against the ones shown by the good banks and against the averages for the banking industry. One of the ratio is the amount of income generated against the expenses incurred to earn the same. This will enable us to know the margin of safety. Another way can be to compare the interest income against interest expense. Also one can compare how much fixed expenses are being incurred, how much are the overheads etc and compare with other banks to see the soundness of management.
