Requirements;

company: Bahrain Islamic Bank

1. Compute for the companys Free Cash flow (3 marks for correct process 2 marks for the correct answer)

2. Provide the interpretation of the computed free cash flow. (5 marks)

3. Compute for the following Financial Ratio; (for every ratio, 2 marks for correct process 1 mark for the correct answer)

1. Current Ratio
2. Quick Ratio
3. Average Collection Period
4. Debt Ratio
5. Net Profit Margin
6. Earnings per share
7. Return on Total Asset
8. Return on Equity
1. Price Earnings Ratio
10. Book Value per share

4. Provide the general interpretation of the computed financial Ratios (5 marks)
5. Explain how the computed financial ratio may help the financial manager to achieve the goal of financial management. (5 marks)
6. Considering your companys debt ratio, discuss how they should utilize bank and equity financing for the next period.

Bahrain Islamic Bank Annual Report 2018 57 CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2018 2018 BD'OOO 2017 BD'000 Note INCOME 43,110 10,829 53,939 40,507 6,808 Income from financing Income from investment in Sukuk Total income from jointly financed assets Return on equity of investment accountholders Group's share as Mudarib Net return on equity of investment accountholders 47,315 (36,010) 24,646 (11,364) 35.951 (1,018) 14.5 Group's share of income from jointly financed assets (both as mudarib and investor) Expense on placements from financial institutions Expense on placements from non-financial institutions and individuals Expense on borrowings from financial institutions Fee and commission income (41,162) 27,223 (13,939) 40,000 (2,043) (57) (4,034) 7,547 216 (556) 20 Income from investment securities Income from investment in real estate Share of results of associates, net Other income Total income (2,032) 7,642 513 213 (1,103) 2,740 2,906 Na 4,372 45,531 4 12,588 1,473 11,194 EXPENSES Staff costs Depreciation Other expenses Total expenses Profit before impairment allowances Impairment allowance, net PROFIT FOR THE YEAR BASIC AND DILUTED EARNINGS PER SHARE (fils) 25,255 20,276 (8,895) 11,381 10.83 12,611 1.570 12,387 26,568 16,338 (6,197) 10,141 9.65 25 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2018 2018 BD'OOO 2017 BD'Ooo Note 11,381 10,141 1,473 8,895 1,570 6,197 83 204 531 OPERATING ACTIVITIES Profit for the year Adjustments for non-cash items: Depreciation Impairment allowance, net Loss on sale of investment in associates Impairment on investment in real estate Loss on sale of investment in real estate Gain on sale of investment securities Gain on foreign exchange revaluation Recoveries from written off accounts Share of results of associates, net Operating profit before changes in operating assets and liabilities Working capital adjustments: Mandatory reserve with Central Bank of Bahrain Financing assets Ijarah Muntahia Bittamleek Other assets Customers' current accounts Other liabilities Placements from financial institutions Placements from non-financial institutions and individuals Equity of investment accountholders Net cash from operating activities 29 (3,472) (86) 18,955 1,103 19,249 100 (34,485) (8,359) (693) 1,578 11,729 44,719 7.255 (7,765) 33,034 (1.440) (57,605) (18,808) 739 (800) (3.596) (24,582) 139,440 52,597 3.480 INVESTING ACTIVITIES Capitalized expenditure of investment in real estate Disposal of investment in real estate Disposal of investment in associates Purchase of investment securities Purchase of property and equipment Disposal of property and equipment Proceeds from disposal of investment securities Net cash from / (used in) investing activities (28) 314 1.348 (119,546) (1.193) (75,590) (845) 95,504 22,550 3,538 (115,567) FINANCING ACTIVITIES Purchase of treasury shares (Repayment) / drawdown of borrowings from financial institutions Dividends paid Net cash (used in) / from financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at 1 January CASH AND CASH EQUIVALENTS AT 31 DECEMBER Cash and cash equivalents comprise of: Cash on hand Balances with CBB, excluding mandatory reserve deposits Balances with banks and other financial institutions excluding restricted balances Placements with financial institutions with original maturities less than 90 days (5,190) (72) (5,262) 50,322 112,794 163,116 (301) 90.156 (4,827) 85,028 22.058 90.736 112,794 15,318 242 10,106 137,450 163,116 13.042 3,654 15,253 80,845 112,794 CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018 Reserves Shares under employee share incentive scheme BD'000 Share capital BD'Ooo Treasury shares BD'000 Share premium BD'000 Statutory reserve BDOO0 Real estate fair value reserve BD'000 Investment securities fair value reserve BD'000 Retained earings BD'000 Total reserves BD OOO Total owners! equity BD'000 2018 101,339 (864) (498) 98 2.977 6,145 745 12,328 22,195 122,270 Balance at 1 January 2018 Impact of adopting FAS 30 (note 2a) - (13,943) (13.943) (13,943) Impact of adopting FAS 30 by associate (note 2a) (350) (350) (350) Balance at 1 January 2018 (restated) 101.339 (864) (498) 745 (1.965) 7,902 107977 Profit for the year 11.381 11.381 11.381 Bonus shares declared for 2017 Transfer to zakah fund (4.970) (265) (200) (4,970) (265) (200) (265) (200) Transfer to charity fund Shares allocated during the year 198 Net movement in investment securities fair value reserve (27) Net movement in real estate fair value reserve (1315) (1,315) Transfer to statutory reserve (1.138) Balance at 31 December 2018 106,406 (892) (391) 120 4,115 4 .830 718 2.843 12.506 117,749 2017 Balance at 1 January 2017 101.339 (563) (604) 1,963 5,361 5 318 ,389 10.141 Profit for the year Dividends declared for 2016 Transfer to zakah fund (5.051) 16,244116,472 10.141 (5,051) (5.051) (137) (301) (137) Purchase of treasury shares (301) Shares allocated during the year 148 Net movement in investment securities fair value reserve 214 Net movement in real estate fair value reserve 784 784 784 - 2014 - (1.014) Transfer to statutory reserve Balance at 31 December 2017 101,339 (864) (498) 98 2,977 6,145 745 12,328 22,195 122,270 Bahrain Islamic Bank Annual Report 2018 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018 2018 BD'OOO 2017 BD'000 Note 65,437 ASSETS Cash and balances with banks and Central Bank Placements with financial institutions Financing assets Investment securities Ljarah Muntahia Bittamleek Ljarah rental receivables 69,666 80,845 561,822 137,450 578,953 240,053 165,730 21,141 258,399 164,397 14,483 23,739 Investment in associates Investment in real estate 21,643 24,284 29.831 14,270 Property and equipment Other assets TOTAL ASSETS 13,641 11,062 1,279,394 11,195 1,228,647 LIABILITIES, EQUITY OF INVESTMENT ACCOUNTHOLDERS AND OWNERS' EQUITY Liabilities 114,744 67,872 Placements from financial institutions Placements from non-financial institutions and individuals 7,255 Borrowings from financial institutions Customers' current accounts Other liabilities 96,386 133,244 24,025 375,654 785,991 101,576 131,666 11,507 Total Liabilities Equity of Investment Accountholders 312,621 793,756 106,406 (892) Owners' Equity Share capital Treasury shares Shares under employee share incentive scheme Share premium Reserves Total Owners' Equity TOTAL LIABILITIES, EQUITY OF INVESTMENT ACCOUNTHOLDERS AND OWNERS' EQUITY (391) 120 101,339 (864) (498) 98 22,195 122,270 1,228,647 12,506 117,749 1,279,394 The consolidated financial statements were approved by the Board of Directors on 24 February 2019 and signed on its behalf by