mangerial fin final

7/25/2019 Mangerial Fin Final

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The name of Allah, the Beneficent, the Merciful

1


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Table of Content:

Acknowledgement 03

Dedication 04

Declaration 05

Executive ummar! 0"

1.0 Chapter No1:

#$0 %ntroduction 0&

3$0 Banking 'i(tor! 0&

4$0 M)B *i(ion And Mi((ion tatement 0+5$0 -.ective of M)B 0+

"$0 /roduct ervice( of M)B 11&$0 Board of Director( 14

'ead ffice 15

10.0 ChapternNo2: 16

11$0 )a2ital Budget )a(h flow E(timation 1"

11$1 %nitial %nve(tment 1&

11$# 2erational )a(h flow 1

11$3 )alculation of %ncremental )a(h flow 1+

11$4 Terminal )a(h low

12.0 Chapter No3: 20

1#$1 )a2ital Budgeting Techniue( #0

1#$# 6et /re(ent *alue ##


13$1 )o(t of )a2ital #4

13$# )o(t of De-t #4

13$3 )o(t of /referred tock #5

13$4 )o(t of )ommon tock #5

2


3/29

13$5 7A)) )alculation #5


14$1 8everage )a2ital tructure #"

14$# 8everage )alculation #&

14$3 Degree of 2erating 8everage #&

14$4 Degree of inancial 8everage #

14$5 Degree of Total 8everage #


1"$1 )onclu(ion 9ecommendation #+

References 31

3


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Acknowle!e"ent:

Ever! 2rai(e i( to Allah alone, The Merciful, The :ind, who give u( the under(tanding and

courage to com2lete our 2ro.ect re2ort and The ;race of Allah -e on /ro2het Muhammad


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$e)cat)ons:

Dedicated to ur 9e(2ected /arent( and Teacher( and riend( i( well$

$eclarat)on

%t i( declared that thi( i( an original 2iece of our own work, exce2t where otherwi(e

acknowledged in text and reference($ Thi( work ha( not -een (u-mitted in an! form for another

degree or di2loma at an! univer(it! or other in(titution for tertiar! education and (hall not -e

(u-mitted -! u( in future for o-taining an! degree from thi( or an! other >niver(it! or

%n(titution$

5


6/29


7/29

1.0C'A#T*R N/: 1

#R#/-* / #R/*CT

To E(timate the )a(h low( for M)B that a 2ro2o(ed unit will generate$ %t re2re(ent( the ca(hflow -enefit( that are likel! to accumulate a( a re(ult of executing the inve(tment$ To calculate

the 6et /re(ent *alue of 2ro.ect o that com2an! can decide that 2ro2o(ed inve(tment will -e

fruitful or not$ To calculate the ex2ected average future co(t of ca2ital for M)B$ To di(cu(( the

leverage, ca2ital (tructure, to ex2lain EB%TE/ a22roach to ca2ital (tructure$

2.0 ntro(ct)on to %C ank )")te:

M)B i( one of the leading -ank( of /aki(tan with a de2o(it -a(e of a-out 9($ #0 -illion and

total a((et( of$ %ncor2orated in 1+4&, M)B (oon earned the re2utation of a (olid and con(ervative

financial in(titution managed -! ex2atriate executive($ %n 1+&4, M)B wa( nationalied along

with all other 2rivate (ector -ank($ Thi( led to deterioration in the ualit! of the Bank?( loan

2ortfolio and (ervice ualit!$ Eventuall!, M)B wa( 2rivatied in 1++1$

During the la(t fifteen !ear(, the Bank ha( concentrated on growth through im2roving (ervice

ualit!, inve(tment in technolog! and 2eo2le, utiliing it( exten(ive -ranch network, develo2inga large and (ta-le de2o(it -a(e and managing it( non2erforming loan( via im2roved ri(k

management 2roce((e($

3.0 ank)n! ')stor:

%t ha( not (o far -een decided a( to how the word CBank? originated$ ome author?( o2inion that

thi( word i( derived from the word( CBaucu(? or Banuet? which mean a -ench$ ther authoritie(

hold the o2inion that the word CBank? i( derived from the ;erman word CBack?, which mean(

C.oint (tock fund?$ %t i( therefore, not 2o((i-le to decide a( to which of the o2inion i( correct, for

no record i( availa-le to a(certain the validit! of an! of the o2inion($

Banking in fact i( 2rimitive a( human (ociet!, (ince man came to realie the im2ortance of

mone! a( a medium of exchange the nece((it! of a controlling or regulating agenc! or

7


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in(titution wa( naturall! felt$ /erha2( it wa( the Ba-!lonian( who develo2ed -anking (!(tem a(

earl! a( #000 B)$ %t i( evident that the tem2le( of Ba-!lon were u(ed a( CBank(? -ecau(e of the

2revalent re(2ect and confidence in the clerg!$

')stor of ank)n! #ak)stans #erspect),e:

At the time of inde2endence, there were 631 off)cesof (cheduled -ank( in /aki(tan, of which

478 were located in 7e(t /aki(tan alone$ A( a new countr! without re(ource( it wa( ver!

difficult for /aki(tan to run it( own -anking (!(tem immediatel!$ Therefore, the ex2ert

committee recommended that the 9e(erve Bank of %ndia (hould continue to function in #ak)stan

(nt)l 30th-epte"ber 1947, (o that 2ro-lem( of time and demand lia-ilit!, coinage currencie(,

exchange etc$ are (ettled -etween %ndia and /aki(tan$ The nonMu(lim( (tarted tran(ferring their

fund( and account( to %ndia$ B! the end of une 1+4 the num-er of officer( of cheduled -ank(

in /aki(tan declined from 631 to 225$ There were 1+ foreign -ank( with the (tatu( of (mall

-ranch office( that were engaged (olel! in ex2ort of cro2 from /aki(tan, while there were onl!

two /aki(tani in(titution(, 'a-i- Bank of /aki(tan and the Au(tralian Bank$ The cu(tomer( of the

-ank are not (ati(fied with the uncertain condition of -anking$ imilarl! the 9e(erve Bank of

%ndia wa( not in the favor of ;ovt$ of /aki(tan$ The ;ovt$ of /aki(tan decided to e(ta-li(h a full

fledge central -ank$ )on(euentl! the ;overnorgeneral of /aki(tan (a)eA&a"

)na(!(rate the -tate ank of #ak)stan on (l 1; 1947.Thu( a landmark wa( made in thehi(tor! of -anking when the (tate -ank of /aki(tan a((umed full control of -anking and currenc!

in /aki(tan$ The -anking (tructure in /aki(tan com2ri(e( of the following t!2e($

tate Bank of /aki(tan

)ommercial Bank of /aki(tan

aving -ank($

)ommercial -ank( have -een the mo(t effective mo-ilie( of (aving( and have -een 2roviding

(hortterm reuirement( of working ca2ital( to trade, commerce and indu(tr!$

>2 to Decem-er 31, 1+&3, there were 14 /aki(tan commercial -ank( that functioned all over the

countr! and in (ome foreign countrie( through a network of -ranche($ All the(e commercial

-ank( were nationalied in anuar! 1, 1+&4, and were recognied and merged into the following

five -ank(F

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6ational Bank of /aki(tan

Mu(lim commercial -ank limited

'a-i- Bank 8imited

>nited Bank 8imited

Allied Bank of /aki(tan

The ;overnment of /aki(tan in the late +0?( introducing the need for the 2rivatiation of (tate

owned -ank( and com2anie($ The 2rivate (ector ha( acce2ted the challenge and mo(t of the

-ank( are 2rivatied toda!$ The tate Bank of /aki(tan i((ue( the (hare( of the(e 2eriodicall!$

Bank em2lo!ee( and other common 2eo2le( can al(o 2urcha(e the(e (hare( and earn 2rofit$

Throughout the 2eriod of -anking hi(tor! the -ank( have -een ex2anding ra2idl! and achieved

the de(ired goal of 2rogre(($

4.0 %C


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'("an Cap)tal:

The (econd o-.ective of M)B Bank i( to take care of the 'uman ca2ital which i( a nece((ar!

thing for the develo2ment and 2ro(2erit! of an! well e(ta-li(hed organiation$

est #lace to >ork:

The third o-.ective of Mu(lim )ommercial Bank 8imited i( to make it a 2lace which i( much

fea(i-le and comforta-le for em2lo!ee( of the -ank$ The M)B i( alwa!( con(ciou( in develo2ing

(uch 2lace where em2lo!ee( of the -ank feel ea(ine(($

Technolo!:

The forth o-.ective of M)B Bank 8imited i( to -ring new and late(t technolog! in the o2eration(

of the -ank$ At M)B, technolog! ha( a direct relation with !our need( it i( a mean( for creating

value and convenience for the cu(tomer$ ver the la(t few !ear( M)B ha( inve(ted heavil! into

(trengthening it( technolog! -ack-one$ Toda! it i( leading the wa! in -anking technolog! and

(etting new (tandard( for the -anking indu(tr! 2enetrating into the local market, li(tening to the

need( of the 2eo2le and educating them of (im2le financial 2roduct( and (ervice( that create -oth

value and convenience$ M)B?( (trength lie( in 2roviding a technological -a(e at the gra(( root(

level of the (ociet! with a challenge to educate and a((imilate (uch (!(tem( acro(( va(t cultural

and economic -ackground($ 7ith over &" automated -ranche(, #43 online -ranche(, over 151

M)B ATM( in #& citie( nationwide and a network of over 1" -ank( on the M6ET ATM (witch,

M)B continuou(l! innovate new 2roduct( and (ervice( that harne(( technolog! for the

cu(tomer?( -enefit$

nerstan)n! ? Relat)onsh)p:

The fifth and ver! im2ortant o-.ective of M)B Bank 8imited i( to create (uch an environment

which i( (uita-le for creating under(tanding and relation(hi2 -etween the em2lo!ee(, thu( going

toward( the wa! of develo2ment and 2ro(2erit!$ ver the !ear(, M)B ha( fo(tered (trong -ond(

with it( cu(tomer($ >nder(tand( them their need($ The! feel comforta-le with M)B it?( their

-ank it re(2ond( to them li(ten( to them 2artner( with them grow( with them$ At M)B,

-anking i( all a-out -eing there for 2eo2le, making a home in their heart(continuou(l! -uilding

relation(hi2( on mutual tru(t and confidence$ 7e under(tand that relation(hi2( are a-out

ex2ectation(our 2roduct( and (ervice( are -a(ed on !our cu(tomer(, ex2ectation($ Be it

financing for 2er(onal or -u(ine(( related need(, fund( tran(fer and trade related facilitie( or need

10


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for different t!2e( of de2o(it account(, M)B offer( !ou a variet! of 2roduct( and (ervice(

cu(tomied to (ati(f! !our individual need($

nerstan)n! Con,en)ence:

The next o-.ective of M)B Bank 8imited i( to make under(tanding a convenient thing for the

whole environment of the -ank, for the 2ur2o(e of -oo(ting u2 it( value( and 2ro(2erit! in (uch a

com2etitive environment$ )onvenience i( what the cu(tomer i( looking for and thi( i( what we

at M)B are continuou(l! (triving to 2rovide$ 7hether it i( the #4 hour( ca(h convenience of our

ATM network or the ea(! availa-ilit! of financing reuirement( or (im2le o2ening of account,

M)B ha( tailored it( 2roduct( and (ervice( to make !our life ea(ier$ M)B know( the 2articular

need( of it( diver(e cu(tomer -a(e d continuou(l! develo2 2roduct( and (ervice( that fulfill the(e

need($

nerstan)n! Rel)ab)l)t:

The la(t -ut not lea(t o-.ective of M)B Bank 8imited i( to make an environment which have an

under(tanding of relia-ilit! in the whole (tructure of the -ank$ 7ith a (trong financial -a(e, a

2romi(ing team and the right re(ource(, M)B ha( 2roved to -e a relia-le 2artner indeed$ M)B

under(tand( the (2ecial need( of the -u(ine((, trading and agricultural (ector($ trategicall!

located -ranche( in (mall town( and citie( 2rovide warm (ervice( and advice to the (mall

-u(ine((men and local trader($ M)B (2eak( their language it under(tand( their need( and

2rovide( tangi-le re(ult($ B! re(2onding in a timel! manner with a flexi-le a22roach, M)B

2rovide( it( client( with the relia-le financial (ervice and (u22ort the! reuire to (ucce((full!

achieve their -u(ine(( o-.ective($ 7ith a (olid foundation of over 50 !ear( in /aki(tan and

having recentl! com2leted 10 (ucce((ful !ear( of 2rivatiation, M)B i(

trongl! 2o(itioned to lead the -anking (ector in the new millennium !ou can feel (afe in our

hand($

6.0 #ro(cts an ser,)ces offere b %C bank l)")te:

8.0 #ro(cts:

M)B -ank offer( a wide range of 2roduct( geared toward( the cu(tomer($ The following

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2roduct( are availa-le for cu(tomer( areF

Acco(nt:

)urrent Account

/8 aving De2o(it(

Allied Ba(ic Banking Account

oreign )urrenc! De2o(it(

Allied /rofit /lu( G Term De2o(it

Allied /rofit /lu( G De2o(it Account

Allied Monthl! %ncome cheme

Allied Bichat chemeF


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>tilit! Bill(

8ocker(

)ommodit! 2eration(

Cons(ltanc -er,)ces:

%n the 2roce(( of 2rivatiation of 2u-lic (ector unit(, 2ro(2ective -u!er( need 2rofe((ional

a((i(tance and M)B, with it( ex2erti(e offer( to their (2ecialied (ervice for valuation of the

market value of the indu(trial unit, 2re2aring -id document( and arranging finance for the

2urcha(e of the unit$

-elf-(pport)n! -che"e:

8oan for 2oorIneed! 2eo2le

6o marku2 charged

Maximum amount of 9($ #5,000IK

Minimum amount of loan 9($ 5,000IK

A@ t)l)t:

/ioneer to introduce ax for cu(tomer (ervice$

acilitate( (2eed! tran(fer of fund($

7ithin an hour an!where in /aki(tan$

)harge( are de-ited to )u(tomer account$

N)!ht ank)n! -er,)ces:

To facilitate -u(ine(( communit!

nl! in commercial trade( center( 2remi(e(

)lient( can make de2o(it( u2 to F00 2m

Date moved to next for all (uch tran(action

t)l)t )lls Collect)on:

>tilit! -ill collection for maximum cu(tomer(

-.ective i( to create interaction with cu(tomer(

)urrentl! 1050 -ranche( are 2erforming thi( .o-

13
http://www.abl.com.pk/utilityBills.htmhttp://www.abl.com.pk/lockers.htmhttp://www.abl.com.pk/commodityOperations.htmhttp://www.abl.com.pk/utilityBills.htmhttp://www.abl.com.pk/lockers.htmhttp://www.abl.com.pk/commodityOperations.htm


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%C R(pee Tra,elers Che(es:

)an -e a (afe(t wa! to carr! ca(h

)heue( i( acce2ted at trade center( -ranche(

6o need to -e aIc holder for traveler cheue(

)heue( are (igned once when i((ued$

>2on delivering (econd (igned are made

%n ca(e of theft no fair to enca(e

AT% BA(to"ate Teller %ach)ne:

Minimum -alance of 9($ 500IK

6o charge( are de-ited 2er tran(action

nl! two hundred 2er annum de-ited

9.0 oar of $)rectors:

%a)n %oha""a %ansha )hairman

%r. -. %. %(neer *ice )hairman

%r. Tar) Raf) Mem-er

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%r. -ha&a -alee" Mem-er

%r. -ar"a A")n Mem-er

$r. %(ha""a Da(b Mem-er

%)an Ra&a %ansha Mem-er

$atoE %oha""e '(sse)n Mem-er

%r. Aftab Ah"a Fhan Mem-er

%r. Ab(l ar) )n Al)as Mem-er

%)an "er %ansha Mem-er

%r. %(ha""a Al) Geb Mem-er

%r. "ran %abool /re(identI )E

'ea /ff)ce:

ervice @ualit! Divi(ion,

)om2laint 9e(olution >nit,

#0th loor, M)B Tower,

%$% )hundrigar 9oad, :arachi G &4000

a+F H+##1 3##&003&

15


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*"a)l:

%nfoLmc-$com$2k

#honeF 0#1 +#1#43#

ranch -electe or #ro=ect:

9anch )ode$ 0"1+

8al :urti 9awal2indi Tari A-ad 8alkurti, 9awal2indi

05155"#" I 5111#""

mc-0"1+Lmc-$com$2k

10.0 C'A#T*R N/: 2

11.0 Cap)tal (!et)n! Cash low *st)"at)on:

$ata abo(t %C:

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17/29

M)B i( con(idering to 2urcha(ing a new unit -! re2lacing it with exi(ting unit$ The exi(ting unit

i( # !ear( old, co(t #5, 00,000 and i( -eing de2reciated under MA)9 u(ing a five !ear recover!

2eriod$ The exi(ting unit i( ex2ected to have u(eful life of 5 more !ear($ The new unit can -e

2urcha(ed at 4,000,000 and reuire( 400,000 in(tallation co(t, it ha( a 5!ear u(a-le life and

would -e de2reciated -! u(ing a five !ear recover! 2eriod$ %t can currentl! (ell the exiting unit

for 9($ #,#00,000 without incurring an! removal or cleanu2 co(t$ At the end of 5 !ear(, the

exi(ting unit ha( ero market value the new unit would -e (old out to net 1,500,000$ The irm i(

(u-.ect to a 40 tax rate$ The e(timated earning( -efore de2reciation, intere(t, and taxe( over the

5 !ear( for -oth and exi(ting unit( are given -elow

Bu!ing of new unit( following item( increa(edF

C(rrent assets C(rrent l)ab)l)t)es

Account( 2a!a-leK1,#00,000

Account( receiva-leK1,#00,000

%nventor! K 1,"00,000

*arn)n!s before eprec)at)on; )nterest an ta+es

Jear 6ew unit Exi(ting unit

1 #,#00,000 +00,000

# #,#00,000 &00,000

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18/29

3 #,#00,000 "50,000

4 #,#00,000 500,000

5 #,#00,000 450,000

11.1 n)t)al n,est"ent:

nstalle cost of new Asset

)o(t of new A((et 4,000,000

H%n(tallation )o(t 400000

Total )o(t of 6ew A((et 4,400,000Afterta+ -ale procees fro" ol asset

/roceed( from (ale of old A((et


19/29

11.2ncre"ental operat)n! cash )nflows

New unit

Jear

/rofit

-efore

De2$ and

Tax

De2reciatio

n

6$/

-efore

Tax

Taxe(6$/ after

Taxe(

2erating

)a(h low($

%nflow(

1#,#00,00

00,000

1,3#0,00

05#,000 &+#,000 1,",000

##,#00,00

01,40,000 &+#,000 31",00 4&5,#00 1,3,#00

3#,#00,00

0

3",0001,3"4,00

0

545,"00 1,400 1,"54,400

4#,#00,00

05#,000

1,",00

0"",00 1,003,#00 1,531,#00

5#,#00,00

05#,000

1,",00

0"",00 1,003,#00 1,531,#00

" 0 ##0000


20/29

=

11.3 Calc(lat)on of ncre"ental Cash lows:

Jear 6ew >nit Exi(ting >nit

%ncremental

2erating )a(h

low

1 1,",000 &40,000 +3#,000

# 1,3,#00 &40,000 1,143,#00

3 1,"54,400 50,000 1,0&4,400

4 1,531,#00 4#0,000 1,111,#00

5 1,531,#00 3"0,000 1,1&1,#00

" ,000 50000 3,000

11.4 Ter")nal Cash low:

After Ta+ -ale procees fro" sale of new Asset

20


21/29

/roceed( from (ale of new A((et 1,500,000

Tax on (ale of new A((et 51#,000

Total 2roceed( from (ale of new A((et +,000

After Ta+ procees fro" sale of ol asset

/roceed( from (ale of old a((et 0

HTax on (ale of old A((et 0

Total 2roceed( from (ale of old A((et 0

H)hange in networking ca2ital 1,"00,000

Terminal )a(h low #,5,000

Tax )alculation(F

Book *alue of a((et at the end of !ear 5K ##0,000

1,500,000##0,000K1,#0,000 9eca2tured de2reciation

Tax 1,#0,000N$40K51#,000

12.0 C'A#T*R N/: 3

12.1 Cap)tal (!et)n! Techn)(es:

12.2 Net #resent


22/29

# 1143#00

3 10&4400

4 1111#00

5 11&1#00

" 3000

7e will di(count our uture ca(h inflow at the rate of 1"$

N#


23/29

14.2 Cost of $ebt:

M)B can (ell 10 !ear, 1#00 2ar value -ond( 2a!ing annual intere(t of +$ And the -ond can -e

(old at 1500 each floatation co(t of 400$

6et /roceed(K ale(lotation )o(t

K1500400

K1100

A22roximation -efore co(t of de-t

:dK%H 2ar value G6dIn I6dH/ar *alueI#

K10H 1#001100I10I1100H1#00I#

BeforeGtax co(t of de-tK10$#"

Aftertax co(t of de-tK 10$#"N


24/29

14.4 Cost of Co""on -tock:

:(K D1I/o Hg

/oK1#00, gK5, D1K0

:(K 0I1#00 H0$05

K11$"&

14.5 >ACC Calc(lat)on:

ource of )a2ital Book *alue )o(t 7eight

De-t &00,000 "$1" 0$5

/I 50,000 +$# 0$035

)I "50,000 11$"& 0$4"5

K


25/29

)nanc)al e,era!e:

%t i( concerned with the relation(hi2 -etween the firm?( EB%T and it( common (tock earning( 2er

(hare


26/29

/$$Div


27/29

Jchan!e )n *TH 0$1&

$H0$14I0$1& K 1$0 An(

or %ncrea(e

$H J chan!e )n *#-KJchan!e )n *T

J chan!e )n *#-H 533I3K 0.39

J chan!e )n *TH 0$#5

$K 0$3+I0$#5K 1.56 e,era!e e+s)st

15.5 $e!ree of Total e,era!e:

or Decrea(e

$TH $/L$

$/H 1$55

$H 1$0

$TH


28/29

onl!$ 8ow 2rofit margin( re(ulted in lack of ualit!$ %t i( not in the favor of com2an! in the

longer term($ )om2an! doe(n?t have (ignificant contact with the market$ o (ome effort in thi(

regard al(o needed to -e done$

References:

#erson:

nter,)ew fro" %al)k "a)r /perat)onal %ana!er of %C alk(rt) ranch

Contact no: 03341104031

>ebs)tes

1 7elcome to M)B Bank 8imited

2 htt2FII-log($reuter($comI2aki(tanI#00I05I05Ima!-ank-u!(into2aki(tan

28
http://www.mcb.com.pk/ir/ir.asphttp://blogs.reuters.com/pakistan/2008/05/05/maybank-buys-into-pakistan/http://www.mcb.com.pk/ir/ir.asphttp://blogs.reuters.com/pakistan/2008/05/05/maybank-buys-into-pakistan/


29/29

3 htt2FIIwww$o-i2aki(tan$com

4 htt2FIIwww$linkedin$com

5 htt2FIIfinance$google$com

6 htt2FIIfinance$!ahoo$com
http://www.obizpakistan.com/http://finance.google.com/http://finance.yahoo.com/http://www.obizpakistan.com/http://finance.google.com/http://finance.yahoo.com/

mangerial fin final

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