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Sri Lanka Equity Forum » Stock Market Talk » Evaluating Bank Stocks

Evaluating Bank Stocks

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1Evaluating Bank Stocks Empty Evaluating Bank Stocks on Tue Oct 11, 2011 4:05 pm

CSE.SAS

CSE.SAS
Global Moderator
How does one evaluate whether a bank's financial condition.

For a manufacturing company, one can use Current Ratio, Debt-Equity Ratio, Total Debt/Net Current Assets to investigate the companies financial condition.

For a bank, the ratios don't make sense. So how does one evaluate a Bank's financial condition?

2Evaluating Bank Stocks Empty Re: Evaluating Bank Stocks on Tue Oct 11, 2011 4:15 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@CSE.SAS wrote:How does one evaluate whether a bank's financial condition.

For a manufacturing company, one can use Current Ratio, Debt-Equity Ratio, Total Debt/Net Current Assets to investigate the companies financial condition.

For a bank, the ratios don't make sense. So how does one evaluate a Bank's financial condition?


Capital adequecy calculations factors which will judge the health of a bank. Hence the reason Central bank is keen on setting guidelines for these also.


As an investor we also can look at Book Values ( Nav) when we consider banks.

3Evaluating Bank Stocks Empty Re: Evaluating Bank Stocks on Tue Oct 11, 2011 4:19 pm

CSE.SAS

CSE.SAS
Global Moderator
@slstock wrote:
@CSE.SAS wrote:How does one evaluate whether a bank's financial condition.

For a manufacturing company, one can use Current Ratio, Debt-Equity Ratio, Total Debt/Net Current Assets to investigate the companies financial condition.

For a bank, the ratios don't make sense. So how does one evaluate a Bank's financial condition?


Capital adequecy calculations factors which will judge the health of a bank. Hence the reason Central bank is keen on setting guidelines for these also.


As an investor we also can look at Book Values ( Nav) when we consider banks.

Thanks Slstock

For your quick response.

Regards

CSE.SAS

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