Financial Indicators

Financial Indicators

Financial indicators are metrics used to assess the financial health, performance, and stability of a company, organization, or economy. These indicators provide valuable insights into various aspects of financial operations and help stakeholders, such as investors, managers, and analysts, make informed decisions.

Common financial indicators include:

1. Profitability Ratios:
   • Net Profit Margin:
     • 2019: (49.29 / 370.08) * 100 = 13.32%
     • 2020: (71.85 / 458.19) * 100 = 15.68%
     • 2021: (106.36 / 520.38) * 100 = 20.43%
     • 2022: (83.41 / 590.12) * 100 = 14.13%
     • 2023: (84.74 / 622.58) * 100 = 13.62%

From the provided net profit margin data for Karnaphuli Insurance Company Ltd over the years 2019 to 2023, we observe the following:

• The net profit margin has shown fluctuations over the years, ranging from 13.32% in 2019 to 20.43% in 2021.
• There was a significant increase in net profit margin from 2019 to 2021, indicating improved efficiency in managing expenses relative to revenue.
• However, the net profit margin declined slightly in 2022 and 2023, dropping to 14.13% and 13.62% respectively.

Based on these observations, we can draw the following conclusions:

• Improving Profitability: The company demonstrated significant improvement in profitability from 2019 to 2021, with the net profit margin increasing from 13.32% to 20.43%. This indicates effective cost management and revenue growth during this period.
• Stability & Maintenance: Despite the slight decrease in net profit margin in 2022 and 2023, the company has maintained profitability above 13%, suggesting stability in its operations and financial performance.

Area of Attention: The fluctuations in net profit margin highlight the importance of continuous monitoring and strategic adjustments in cost management and revenue generation. The company may need to analyze the factors contributing to the decline in profitability in 2022 and 2023 to address any underlying issues.

Overall, while Karnaphuli Insurance Company Ltd has demonstrated strong profitability, there is a need for ongoing efforts to sustain and potentially improve its net profit margin in the future. This could involve initiatives to enhance operational efficiency, optimize costs, and capitalize on growth opportunities in the insurance market.

2. Liquidity Ratios:
   • Current Ratio:

2019 to 2023 are approximately:

• 2019: 0.764
• 2020: 0.826
• 2021: 0.912
• 2022: 0.931
• 2023: 1.000

From the provided current ratio data for Karnaphuli Insurance Company Ltd over the years 2019 to 2023, we observe the following:

• The current ratio has consistently increased over the years, from 0.764 in 2019 to 1.000 in 2023.
• The current ratio values are above 1 for all years, indicating that the company has more current assets than current liabilities.

Based on these observations, we can draw the following conclusions:

1. Improving Liquidity: The increasing trend in the current ratio suggests that Karnaphuli Insurance Company Ltd has been able to enhance its liquidity position over the years. This indicates the company's ability to meet its short-term financial obligations more comfortably.
2. Financial Stability: The current ratio values being consistently above 1 imply that the company has sufficient current assets to cover its current liabilities. This signifies financial stability and reduces the risk of liquidity problems or difficulties in meeting short-term obligations.
3. Positive Indicator: A current ratio above 1 is generally considered favorable, as it indicates that the company has adequate liquidity to cover its short-term liabilities. Karnaphuli Insurance Company Ltd's current ratio values being consistently above 1 reflect positively on its financial health and management of short-term liquidity risks.

Overall, the improving trend in the current ratio and its values consistently above 1 indicate that Karnaphuli Insurance Company Ltd has maintained a strong liquidity position and financial stability over the years. This bodes well for the company's ability to meet its short-term obligations and manage its operations effectively.

 

3. Solvency Ratio:
   •           Solvency Ratio:
     • 2019: 331.82 / 81.90 = 4.05
     • 2020: 368.54 / 113.45 = 3.25
     • 2021: 581.99 / 142.02 = 4.10
     • 2022: 583.62 / 145.27 = 4.02
     • 2023: 620.59 / 155.28 = 3.99

From the provided solvency ratio data for Karnaphuli Insurance Company Ltd over the years 2019 to 2023, we observe the following:

• The solvency ratio has fluctuated slightly over the years, ranging from 3.25 in 2020 to 4.10 in 2021.
• Despite fluctuations, the solvency ratio values for all years are above 3, indicating that the company has sufficient available solvency margin to cover its required solvency margin.

 

Based on these observations, we can draw the following conclusion:

Stable Financial Health: Karnaphuli Insurance Company Ltd has maintained a stable level of long-term financial stability as evidenced by its solvency ratio consistently above 3 throughout the years. This indicates the company's ability to meet its long-term debt obligations comfortably and suggests a robust financial position.

While there have been slight fluctuations in the solvency ratio, the overall trend indicates that Karnaphuli Insurance Company Ltd has effectively managed its long-term financial obligations and has sufficient available solvency margin to cover potential liabilities. This stability in financial health is essential for maintaining investor confidence, securing financing, and sustaining operations in the long run

 

4. Market Performance Indicator:
   •            Price to Earnings (P/E) Ratio:
     • 2019: 22.20 / 1.10 = 20.18
     • 2020: 33.80 / 1.60 = 21.13
     • 2021: 42.50 / 2.37 = 17.94
     • 2022: 27.60 / 1.86 = 14.84
     • 2023: 36.90 / 1.89 = 19.52

From the provided Price-to-Earnings (P/E) ratio data for Karnaphuli Insurance Company Ltd over the years 2019 to 2023, we observe the following:

• The P/E ratio has fluctuated over the years, ranging from 14.84 in 2022 to 21.13 in 2020.
• There is no clear trend in the P/E ratio over the years, however, in the year 2023, the trend is quite better.

Based on these observations, we can draw the following conclusion:

Mixed Market Performance: Karnaphuli Insurance Company Ltd's market performance, as reflected by the P/E ratio, has been mixed over the years. While there have been fluctuations in the P/E ratio, there is no consistent trend observed.

• A higher P/E ratio indicates that investors are willing to pay more for each unit of earnings, suggesting optimism about the company's future growth prospects.
• Conversely, a lower P/E ratio may indicate undervaluation or cautious investor sentiment.

Therefore, the fluctuating P/E ratio for Karnaphuli Insurance Company Ltd suggests varying market perceptions and expectations about the company's future performance. Further analysis of factors influencing market sentiment, such as industry dynamics, regulatory environment, and company-specific initiatives, may be necessary to understand the underlying reasons for the fluctuations in the P/E ratio.

Overall, while the P/E ratio provides insights into investor sentiment, it is essential to consider other factors and conduct a comprehensive analysis to assess Karnaphuli Insurance Company Ltd's market performance accurately.

 

For the Non-Life Insurance companies, the financial indicators

 

                                                          Taka in Million

Particulars	2023
Gross Premium Income	622,582,009
Investment Income	54,389,457
Fixed Deposit (FDR)	700,677,167
Investment in Bond, Share, Deb. & Unit Fund	339,919,913
Total Investment	1,132,052,407
Total Assets	1,816,435,614
Net Asset Value Per Share (NAVPS)	21.61
Available Solvency Margin	620.59

 

Based on the provided financial indicators for the Non-Life Insurance company in 2023, we can draw the following conclusions:

1. Revenue Generation:
   • The Gross Premium Income for 2023 is 622.58 million Taka, indicating the total revenue generated from insurance premiums.
   • Investment Income contributes an additional 54.39 million Taka to the company's revenue streams, highlighting the importance of investment activities in generating income.

2.  Investment Portfolio:
   • The company holds significant investments, with a total investment portfolio valued at 1,132.05 million Taka.
   • This portfolio includes Fixed Deposits (FDR) totaling 700.68 million Taka and investments in Bonds, Shares, Debentures, and Unit Funds amounting to 339.92 million Taka.
   • A diversified investment portfolio can help mitigate risks and generate returns to support the company's operations and financial stability.
3. Financial Strength:
   • Total Assets stand at 1,816.44 million Taka, reflecting the company's overall financial strength and asset base.
   • The Net Asset Value Per Share (NAVPS) is 21.61 Taka, indicating the book value of each share based on the company's total assets and liabilities.
   • A higher NAVPS suggests greater shareholder value and financial stability.
4. Solvency Margin:
   • The Available Solvency Margin is reported as 620.59 million Taka, representing the excess of assets over the required solvency margin.
   • This indicates the company's ability to meet its regulatory solvency requirements and absorb potential losses, ensuring financial soundness and stability.

In conclusion, the Non-Life Insurance company demonstrates robust financial performance and strength in 2023, with steady revenue generation, a diversified investment portfolio, strong asset base, and sufficient solvency margin. These indicators suggest a healthy and resilient financial position, positioning the company well to navigate risks and capitalize on growth opportunities in the insurance market.