The aim of this paper was conducted to investigate the financial performance of Islamic and Conventional banks to support depositors, bank managers, shareholders, investors and regulators by providing true picture of financial position of Islamic as well conventional banks in Pakistan. The ratios often compare financial statement data with stock market trading information for publicly traded companies. Financial ratios are an important tool of economic decision-making for all businesses. . It

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... important to choose financial ratios that are applicable to the business at hand. There are hundreds of financial ratios available, some of which apply to all businesses and some of which are industry-specific. Financial ratios were estimated from annual reports and financial statements i.e. Income statement and Balance sheet for the period of 2008 to 2011. Twelve financial ratios were estimated to measure these performances in term of profitability, liquidity, risk and solvency, capital adequacy. To determine the significance of mean differences of these ratios, Independent sample t-test and ANOVA was used between and among banks. The study concluded that Islamic banks proved to be more liquid, less risky and operationally efficient than conventional banks