session 3 measuring perf 2011.05.23
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Session 3: Measuring Performance of MFIsSession 3: Measuring Performance of MFIs
Practical Microfinance Course, Session 3 Microfinance
Sadrudin Akbarali, FCA
Session 3: Measuring Performance of MFIs
Financial Structure Outreach Indicators Overall Financial Performance Revenue Expenditure Efficiency Productivity Risk & Liquidity
08/04/23
Understanding Financial StatementsUnderstanding Financial Statements
What are/were your fears about financial statements?
Why is it necessary to understand financial statements?
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
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Actions for understanding Financial Statements
Actions for understanding Financial Statements
Actions for improving understanding of financial statements
a. Resources: Rural Finance on-line, ‘Buddy’, others
b. BY WHEN
1. 1a1b
2. 2a2b
3. 3a3b
4. 4a4b
5. 5a5b
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Financial ratios for NOWHEREFinancial ratios for NOWHERE
List 5 KEY ratios Comments
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
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Nowhere Ltd 1 Balance Sheet at 31.12: 2007 2008 2009 %
$ $ $
Net Fixed Assets 130,000 140,000 120,000
Gross Loan Portfolio 3,350,000 3,800,000 4,600,000
Less Impairment Loss Allowance 100,000 114,000 138,000
Net Loan Portfolio 3,250,000 3,686,000 4,462,000
Cash at Bank or in Hand 330,000 473,000 558,000
Debtors 35,000 50,000 58,000
Total assets 3,745,000 4,349,000 5,198,000
Donated Capital 25,000 125,000 420,000
Capital 3,500,000 3,500,000 3,500,000
Retained Profit -218,800 -142,000 -92,000
Equity 3,306,200 3,483,000 3,828,000
Long Term Loans 300,000 250,000 200,000
Other Liabilities 63,800
66,000
70,000
Liabilities and equity
3,745,000
4,349,000 5,198,000 08/04/23
Income & Expenditure for Y/E 31st December: 2007 2008 2009
$ $ $
Income
Interest from Loan Income 670,000 980,000 1,150,000
Fees 100,000 98,000 115,000
Investment Income 1,300 1,800 18,000
TOTAL Income 771,300 1,079,800 1,283,000
Less: Financial Expense 13,000 11,000 9,000
Operating income 758,300 1,068,800 1,274,000
Net impairment loss, gross loan portfolio 55,000 45,000 48,000
Operating Expenses 680,000 950,000 1,180,000
Personnnel 440,000 620,000 770,000
Administrative 200,000 280,000 350,000
Depreciation 40,000 50,000 60,000
Net Operating Income 23,300 73,800 46,000
Non Net operating Income 2,500 3,000 4,000
Net Income before Taxes & Donations 25,800 76,800 50,000
Net Income After Taxes,before Donations 25,800 76,800 50,000
Net Income after Taxes & Donations 25,800 76,800 50,000
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Nowhere Ltd 2
Data 2007 2008 2009 %
$ $ $
No of Branches 6 8 8
Personnel 159 169 175
Loan Officers 94 98 105
Outreach
No of Active Borrowers 14,552 17,818 18,390
Male 7,062 7,639 7,810
Female 7,490 10,179 10,580Portfolio at Risk (PAR) Nos
Less than One month 14,131 17,390 17,939
One to three months 245 278 248
Three to Six months 176 150 203Delinquency Gross Portfolio 3,350,000 3,800,000 4,600,000
Less than One month 3,442,254 3,731,135 4,528,449
One to three months 33,621 45,744 37,364
Three to Six months 24,125 23,121 34,187
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Nowhere Ltd 3
Balance Sheet: Statement of Affairs
ASSETS (Use of Funds)• ? ..................
• ? ..................
• ? ..................
• ? ..................
• ? ..................
---------------Total ---------------
Source of Funds• ? ................
• ? ................
• ? ................
• ? ................
................Total ................
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Income & Expenditure Account
Summarised Income & Expenditure $ %
Income Interest Income & Fees ?
Less: Interest on Loan Fund ?
Impairment Loss re Loan Portfolio ?
Net Income ?
Operating Expenses ?
Personnel ?
Administrative ?
Depreciation
Net Surplus/Deficit ?
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MIX MarketMIX Market
• http://www.mixmarket.org/• Examples: Grameen, CASHPOR • Assignment: Look on the MIX Market at a MFI
in your case study country.– List which of the key ratios are reported– What are the pros and cons of the MIX Market for
finding data on MFIs?
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8. Financial Planning & Budget
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Session 3: assignmentPreparation for Session 4 and Your MFI case studyRural Finance on-line Lesson 7. Understanding the
accounts of financial service providershttp://www.microfinancelessons.com/about/lesson7.html
Read Power Point handout: Session 3 Assignment: Building Blocks for MF
Pair up with a ‘buddy’ to work on your microfinance case study
Course assignment: step 1Choose a country, region or city you want to
research for a microfinance project. You will produce a report to present to the group in
Session 7
Summary Session 3: Measuring Performance Financial Structure Outreach Indicators Overall Financial Performance Revenue Expenditure Efficiency Productivity Risk & Liquidity
08/04/23 Practical Microfinance Session 3/7: MF Building Blocks 13