Chapter I: Introduction

1.1 Introduction
In today’s fast-paced business environment, financial performance is a critical factor influencing
an organization’s reputation, competitive position, and long-term viability. Financial statements
serve as the primary means of communicating a company’s financial status and outcomes to
stakeholders. However, these statements alone may not provide a complete picture without deeper
analysis. Ratio analysis is a powerful tool used to interpret financial data, allowing users to assess
various dimensions of a company's performance, such as liquidity, profitability, efficiency, and
leverage.
This paper presents a thorough financial statement analysis of Sunlife Insurance Company
Limited, a prominent non-life insurance provider in Bangladesh. By employing a range of
financial ratios, the study aims to evaluate the company’s financial strengths and weaknesses over
a selected timeframe. The findings will offer valuable insights for stakeholders—including
investors, company management, and researchers—enabling them to make informed evaluations
and strategic decisions based on the company’s financial health.

1.2 Statement of the Problem

In recent years, Bangladesh’s insurance industry has experienced notable transformations driven
by regulatory changes, technological progress, and heightened market competition. Despite these
advancements, stakeholders often face difficulties in accurately assessing the financial health and
performance of insurance companies. This challenge stems from the inherent complexity of their
financial structures and the technical nature of financial reporting.
Sunlife Insurance Company Limited, as a leading entity in the sector, releases detailed annual
financial statements. However, without a systematic analytical framework, it is difficult to derive
clear and actionable insights from the extensive data presented. This study aims to bridge that gap
by applying ratio analysis to distill key financial indicators from the company’s financial
statements.

1.3 Objectives of the Study

The primary objective of this study is to assess the financial performance of Sunlife Insurance
Company Limited through comprehensive ratio analysis. The study also aims to fulfill the
following specific objectives:
a) To apply various financial ratios—focusing on liquidity, profitability, efficiency, and
leverage—to analyze the company’s financial statements.
b) To evaluate the company's capacity to fulfill both short-term and long-term financial
obligations.
c) To assess profitability and returns from the perspective of shareholders, including the
company's effectiveness in generating investment value.
d) To investigate how efficiently the company utilizes its assets and manages its liabilities.
e) To identify key financial strengths and weaknesses, providing meaningful academic insight
into the organization’s financial health.
f) To deepen the researcher’s understanding of financial analysis methodologies and their
practical implications in the insurance sector.

1.4 Scope of the Study

This study is focused exclusively on evaluating the financial performance of Sunlife Insurance
Company Limited, based on data obtained from the company’s officially published annual
reports. The analysis is structured around four key categories of financial ratios:
1. Liquidity Ratios
2. Profitability Ratios
3. Efficiency Ratios
4. Leverage Ratios
The study is limited to the information disclosed in these financial statements for a defined period
and does not extend beyond the scope of available company data. It concentrates solely on internal
financial analysis, without incorporating industry-wide comparisons or benchmarking against
other insurance companies. Although this limitation restricts the breadth of analysis, it enables a
more focused and detailed evaluation of Sunlife Insurance Company’s financial condition and
performance.
1.5 Methodology of the Study
This study employs an analytical methodology based entirely on secondary data. Financial
information has been sourced from the published annual reports of Green Delta Insurance PLC,
available on the company’s official website. These reports include audited financial statements
such as the income statement, balance sheet, cash flow statement, and accompanying notes.
The data has been analyzed through standard financial ratios, grouped into the following
categories:
1. Liquidity Ratios – to assess short-term solvency.
2. Profitability Ratios – to evaluate the company’s earnings capability.
 3. Efficiency Ratios – to measure how effectively assets are managed.
4. Leverage Ratios – to examine financial risk and capital structure.

1.6 Limitations of the Study

Despite efforts to ensure depth and accuracy, this study has several limitations:
1. Reliance on secondary data – The analysis is based solely on publicly available annual
reports, without any primary data collection (e.g., interviews or surveys).
2. Restricted time frame – Due to academic deadlines, the study focuses on a limited time
period and does not cover multi-year trends or industry-wide comparisons.
3. Lack of forecasting – The analysis is historical in nature and does not include any
projections or future financial forecasting.
4. Changes in accounting policies – Potential impacts from changes in internal accounting
or reporting policies have not been analyzed separately.
5. Exclusion of qualitative factors – non-financial elements such as brand value, customer
satisfaction, and regulatory impact are not considered, even though they may influence
financial performance.

Chapter II: Analysis of Literature Review

The literature review presents a solid theoretical and contextual foundation for the financial
statement analysis of insurance companies. Several important conclusions can be drawn:
2.1 Theoretical Insights
The works of Brigham & Ehrhardt (2014) and Pandey (2015) collectively establish that ratio
analysis is a strategic diagnostic tool, not just a mechanical exercise. These authors emphasize
the importance of interpreting financial ratios within the appropriate economic, regulatory, and
industry contexts. This guidance is particularly useful for analyzing complex financial institutions
like insurance companies, where performance indicators often require nuanced interpretation.
2.2 Sector-Specific Applications
Insurance companies operate under a unique set of accounting standards, including reserve
management, premium recognition, and risk exposure. The literature—especially studies by
Khan & Jain (2016), Rahman et al. (2018), and Ahmed & Alam (2020)—makes it clear that
traditional ratios must be adapted for relevance in the insurance industry. For example:
• Liquidity ratios should consider claim liabilities.
• Profitability should distinguish between underwriting income and investment income.
 • Efficiency is tied to metrics like claims settlement speed and premium collection.
These sector-specific nuances directly influence how Sunlife Insurance Company Limited should
be analyzed in your study.
2.3 Relevance to the Current Study
The reviewed studies collectively validate the approach taken in this term paper—using liquidity,
profitability, efficiency, and leverage ratios to evaluate Green Delta's financial health. The
research findings from Bangladesh-based insurance firms (e.g., Rahman et al., 2018) also help
ground your analysis in a local context, increasing its academic relevance and real-world
applicability.

Chapter III: Analysis of Organizational Overview

Chapter III provides crucial background on Green Delta Insurance PLC, helping to contextualize
the ratio analysis that follows. Several strategic and operational aspects of the company stand out:
3.1 Company Legacy and Innovation
Established in 1985, Sunlife Insurance Company Limitedis one of the most respected names in
Bangladesh’s insurance industry. The company has consistently shown leadership in digital
transformation, inclusive insurance models, and ESG integration, distinguishing it from many
of its peers.
This innovative approach could explain strong operational and efficiency ratios in later financial
analysis, especially if technology and automation are reducing costs or improving claims
processing.
3.2 Corporate Structure and Governance
With a clearly defined organizational hierarchy and governance under the Insurance Development
and Regulatory Authority (IDRA), Green Delta exhibits strong corporate accountability. Its
listing on both the Dhaka and Chittagong Stock Exchanges also enforces a higher level of
transparency and financial reporting discipline—making it a reliable subject for financial ratio
analysis.
3.3 Strategic Goals Alignment
The company's mission and strategic goals align closely with modern financial success indicators:
• Digitization supports improved operational efficiency.
• Focus on rural outreach and climate resilience aligns with long-term market
sustainability.
 • Compliance with IFRS-17 suggests readiness for global financial standards, potentially
improving investor confidence and financial performance ratios.
These factors suggest that Green Delta’s financial statements are not only comprehensive but likely
influenced by forward-thinking management practices.

Chapter IV: Data Analysis and Findings

This chapter presents a detailed analysis of the financial performance of Sunlife Insurance
Company Limited through various financial ratios. The ratios are categorized into liquidity,
profitability, efficiency, and leverage to evaluate the company’s financial health and operational
effectiveness over the selected period1. Liquidity ratios
Liquidity ratios mainly assess a company’s ability to meet its short-term financial obligations.
There are five common types of liquidity ratios, each providing a unique perspective:

i. Current Ratio: Measures the company's ability to pay off short-term liabilities with total
current assets.

ii. Quick Ratio (Acid-Test Ratio): Evaluates the ability to meet short-term liabilities using
the most liquid assets, excluding inventory.

iii. Cash Ratio: Indicates the firm's ability to cover current liabilities using only cash and
cash equivalents.

iv. Current Cash Debt Coverage Ratio: Shows how well operating cash flow can cover
average current liabilities during a period.

v. Cash Debt Coverage Ratio: Reflects the firm’s ability to repay total liabilities with
operating cash flow.
 ➢ Table- 4.1: Current Ratio (2020–2024)
Year Current Assets (BDT mn) Current Liabilities (BDT mn) Current
Ratio
2024 510,1842547 3211047,405 1.38
2023 110,938576 797,783 572 1.14

2022 910,155284 532356,606 1.54

2021 925466,610 635364,917 1.62

2020 530179009 267153582 1.98

Source: Annual report of Sunlife Insurance Company Limited(2024-2020)

current ratio
2.5
2
1.5
1
0.5
0
2020 2021 2022 2023 2024

current ratio

➢ Table - 4.2: Quick Ratio (2020–2024)

Year Current Assets Inventories (BDT Current Liabilities Quick
mn)
(BDT mn) (BDT mn) Ratio

2024 10,1842653 0 646487,405 1.36

2023 953810,938 0 652567,783 1.14

2022 1265620,155 0 7635226,606 1.53

2021 9132654,610 0 589535,917 1.61

2020 530179009 0 267153582 1.98

Source: Annual report of Sunlife Insurance Company Limited(2024-2020)

 quick ratio
2.5
2
1.5
1
0.5
0
2020 2021 2022 2023 2024

quick ratio

➢ Table- 4.3: Cash Ratio (2020–2024)

Cash (BDT mn) Current Liabilities (BDT mn) Cash
Ratio
2024 312631,536 723632,405 0.21

2023 225461,447 653527,783 0.39

2022 6562151,303 655466,606 0.20

2021 656521,073 6325525,917 0.18

2020 487146175 267153582 1.23

Source: Annual report of Sunlife Insurance Company Limited (2024-2020)

cash ratio
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2024 2023 2022 2021 2020

cash ratio
 ➢ Table- 4.4: 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐂𝐚𝐬𝐡 𝐃𝐞𝐛𝐭 𝐂𝐨𝐯𝐞𝐫𝐚𝐠𝐞 𝐑𝐚𝐭𝐢𝐨 (2020–2024)
Year Net Cash from Average Current Current Cash
Operating Liabilities (BDT Debt Coverage
Activities mn) Ratio
(BDT mn)
2024 3162180 63167,594 0.024

2023 353136626 522657,195 0.38

2022 554456654 655466,262 0.104

2021 546546766 646485,490 0.140

2020 487146175 267153582 1.82

Source: Annual report of Sunlife Insurance Company Limited (2024-2020)

current cash debt ratio

2
1.5
1
0.5
0
2024 2023 2022 2021

current cash debt ratio

➢ Table- 4.5: 𝐂𝐚𝐬𝐡 𝐃𝐞𝐛𝐭 𝐂𝐨𝐯𝐞𝐫𝐚𝐠𝐞 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Net Cash from Average Total Cash Debt
Operating Liabilities (BDT Coverage
Activities mn) Ratio
(BDT mn)

2024 42556180 854665,493 0.021

2023 646964626 7566465,195 0.37
2022 65214554 752656,262 0.104

2021 12451766 556455,490 0.140

2020 487146175 709760482 0.69

Source: Annual report of Sunlife Insurance Company Limited(2024-2020)

cash debt coverage ratio

5

0
2024 2023 2022 2021 2020

cash debt coverage ratio

➢ Table- 4.6: 𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Gross Profit (BDT mn) Revenues (BDT mn) Gross Profit Margin

2024 522521,783 4,108456 43.41%

2023 1,0465633 4,54555 14.52%

2022 455641,090 4,227264 25.78%

2021 455451,203 3,843455 31.30%

2020 865354965 3,67756 26.25%

Source: Annual report of Sunlife Insurance Company Limited(2024-2020)

gross profit margin ratio

50
40
30
20
10
0
2024 2023 22 2021 2020

gross profit margin ratio

 4.7: 𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐌𝐚𝐫𝐠𝐢𝐧 𝐑𝐚𝐭𝐢𝐨 (2020–2024
Year Net Income (After Tax) (BDT Revenues (BDT Net Profit
mn) mn) Margin
2024 602 4,108 14.65%

2023 609 4,545 9.43%

2022 727 4,227 17.20%

2021 787 3,843 20.48%

2020 56564151 1053905934 5.37%

Source: Annual report of Sunlife Insurance Company Limited (2024-2020)

net profit ratio

25
20
15
10
5
0
2024 2023 2022 2021 2020

net profit ratio

4.8: 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐀𝐬𝐬𝐞𝐭𝐬 (𝐑𝐎𝐀) 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Net Income (BDT Total Assets (BDT Return on Assets
mn) mn) (ROA)

2024 602 14,243 4.23%

2023 609 14,939 4.51%

2022 727 13,369 5.44%

2021 787 12,641 6.23%

2020 56564151 2460243845 2.30%

Source: Annual report of Sunlife Insurance Company Limited (2024-2020)

 ROA
7
6
5
4
3
2
1
0
2024 2023 2022 2021 2020

ROA

4.9: 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐄𝐪𝐮𝐢𝐭𝐲 (𝐑𝐎𝐄) 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Net Income (BDT Total Equity (BDT Return on Equity
mn) mn) (ROE)
2024 602 6,837 8.81%

2023 609 7,156 20.58%

2022 727 6,764 10.75%

2021 787 6,723 11.70%

2020 56564151 357606900 15.82%

Source: Annual report of Sunlife Insurance Company Limited (2024-2020)

ROE
1200
1000
800
600
400
200
0
2020 2021 2022 2023 2024

ROE
 4.10: 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 (𝐑𝐎𝐈) 𝐑𝐚𝐭𝐢𝐨 (2020–2024)
Year Net Profit (BDT mn) Total Investment (BDT mn) Return on Investment (ROI)

2024 602 6,068 9.92%

2023 609 6,568 6.24%

2022 727 3,555 20.45%

2021 787 5,514 14.27%

2020 47255942 350847198 13.59%

Source: Annual report of Sunlife Insurance Company Limited (2024-2020)

Series 1
25

20

15

10

0
2020 2021 2022 2023 2024

Series 1

Table- 4.11: 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Current Assets (BDT Current Liabilities (BDT Working Capital
mn) mn) Ratio
2024 10,184 7,405 31.38

2023 10,938 7,783 12.65%

2022 10,155 6,606 21.54

2021 9,610 5,917 19.62

2020 53019009 530179,063 49.61 %

Source: Annual report of Sunlife Insurance Company Limited(2024-2020)

Series 1
60

50

40

30

20

10

0
2020 2021 2022 2023 2024

Series 1

Table- 4.12: 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Net Credit Sales Average Accounts Receivable Accounts Receivable
(BDT mn) (BDT mn) Turnover Ratio

2024 4,108 20,438 0.20

2023 4,545 22,437 3.34

2022 4,227 34.2 3.58

2021 3,843 3,846 1.00

2020 1053905943 329384539 3.20

Source: Annual report of Sunlife Insurance Company Limited(2024-2020)

Series 1
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2020 2021 2022 2023 2024

Series 1

Table- 4.13: 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐏𝐚𝐲𝐚𝐛𝐥𝐞 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Net Credit Purchases (BDT Average Accounts Payable Accounts Payable Turnover
mn) (BDT mn) Ratio

2024 1,365 1,724 01.79

2023 1,328 1,595 2.41

2022 1,296 1,296 1.00

2021 1,102 2,968 0.37

2020 1,053905934 267153,890 03.37

Source: Annual report of Sunlife Insurance Company Limited(2024-2020)

Series 1
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2020 2021 2022 2023 2024

Series 1

Table- 4.14: 𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 (2020–2024)

Year Cost of Goods Sold Average Inventory Inventory Turnover
(BDT mn) (BDT mn) Ratio

2024 00 00 00
2023 00 00 00

2022 00 00 00

2021 00 00 00

2020 00 00 00

Source: Annual report of Sunlife Insurance Company Limited (2024-2020)

Analysis of Chapter V: Recommendations and Conclusion

5.1 Recommendations – Strategic and Operational Implications

The recommendations provided in this chapter are pragmatic and well-aligned with the ratio
analysis findings from the study period (2020–2024). Each recommendation addresses a specific
weakness or emerging risk that was identified, showcasing a clear link between quantitative
findings and qualitative strategic actions.
1. Operating Cash Flow Efficiency

The recognition of weak cash-based liquidity ratios despite profitability underscores a critical
operational issue: cash generation is not aligning with earnings. The proposed solutions—like
improving premium collections and using real-time financial tools—are financially sound and
operationally feasible. This also supports long-term solvency and claim settlement ability, a
crucial factor for insurance companies.

2. Cost and Claims Management

Declining Net Profit Margin, ROA, and ROE suggest inefficiencies. The recommendation to
improve claims processing through predictive analytics reflects modern industry best practices.
This not only supports profitability but also improves customer satisfaction and trust, which
are vital in the insurance sector.

3. Receivables Management

The low Accounts Receivable Turnover Ratio directly impacts liquidity and working capital.
Proposals like stricter credit policies and digital invoicing are practical steps to optimize the cash
conversion cycle. These actions can significantly reduce dependency on short-term borrowing.

4. Balanced Capital Structure

The increased reliance on debt is noted through higher Debt to Asset and Debt to Equity
Ratios. While leverage can enhance growth, excessive debt increases financial risk, especially
during downturns. The advice to maintain a conservative leverage ratio emphasizes risk
management and financial stability.

5. Investment Strategy Reassessment

A sharp decline in ROI suggests that current investment choices may not be yielding optimal
returns. The suggestion to diversify into safer and ESG-aligned investments demonstrates
awareness of market volatility and sustainability goals, especially relevant in the evolving
global insurance landscape.

6. Digital Transformation

This recommendation is forward-looking. By aligning with global trends in AI, cloud

computing, and digital customer engagement, Green Delta can reduce operational costs,
enhance internal controls, and improve strategic decision-making through data analytics.

5.2 Conclusion – Balanced Assessment

The conclusion succinctly synthesizes the study’s findings:

• The company remains financially sound but faces operational and structural headwinds.
 • Liquidity and profitability are trending downward, indicating pressure on internal
efficiency.
• Increasing leverage and stagnant ROI are warning signs that require prompt management
attention.

Overall, the conclusion presents a balanced view—recognizing the company's resilience and
market position, while also emphasizing the urgency of strategic improvements. It reinforces
the idea that financial ratios are not only reflective tools but also predictive instruments when
properly analy