Financial Performance Analysis of IDLC Limited

Abstract

IDLC Finance Limited which is the pioneer financial institution in Bangladeshis one of renowned non-banking financial institution in Bangladesh. It started its operation at 1985. IDLC was licensed as a financial institution by the country’s central bank Bangladesh Bank, following the enactment of the financial Act 1993. IDLC Finance has different kinds of products and services. IDLC Finance Limited is a mother company. It has three separated subsidiaries. A company can’t run without its operation. Like other non-financing company IDLC Finance Limited main operation is loan which is their asset and deposit which is their liability. They take deposit from customer and companies for giving securities of their money and give loan for fulfilling the customer’s and company’s need and prosperity. Performance evaluation based on ratio analysis approach are one of the crucial parts for the success of any organization. In this report, we have tried to analyze the last five years performance of IDLC Finance Limited based on five dimensions of ratio analysis. At the very beginning of the report, we have tried to evaluate the liquidity dimension with the help of four particular ratios that show us that the liquidity position of IDLC is going down for the last five years. Firm is facing more risk in terms of liquidity. Then we evaluate the profitability dimension with the help of 10 different ratios which indicate fluctuate profitability conditions of IDLC. IDLC is not able to continue their good condition and again, they are not let the profitability conditions down. After that, we have tried to show the performance based on the solvency dimension under 6 ratios which indicate that IDLC is relying more and more deposits for the last five years which is increasing their debt portion over the equity. Fourth dimension was efficiency dimension that shows us how efficiently IDLC was using their assets to generate more revenue with the help of 5 different ratios. It also gives us fluctuate result in terms of efficiency. At the very end, we evaluate the performance based on market value dimension under 6 ratios. Though they are relying less on equity for the last five years, still they had high demand of their shares which increases the price of shares and they also provided sufficient return to their shareholders. The company’s operation section plays a vital role to improve its financial performance. The growth of the company is very good as because day by day the earning per share of the company increasing. In 2014 it was 3.56 but in 2016 it was 4.62 which indicate the performance as well as demand of the company increased. Thus happened because the return of the asset of this company was increased, non-performing loan was less. Beside total asset growth, financial expense coverage ratio also increased. IDLC Finance Limited is performing its activities in such a way, that why number of client of it is increasing day by day. It is a very good sign for a capital market. Its good performance is not only beneficiating the company but also providing good return to the country economy through its CSR activities and through maintain the government rule properly.