Session 3 measuring perf 2011.05.23

 Economy & Finance

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1. Session 3: Measuring Performance of MFIs Practical Microfinance Course, Session 3 Microfinance Sadrudin Akbarali, FCA 2. Session 3: Measuring Performance of MFIs…
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  • 1. Session 3: Measuring Performance of MFIs Practical Microfinance Course, Session 3 Microfinance Sadrudin Akbarali, FCA
  • 2. Session 3: Measuring Performance of MFIs <ul><li>Financial Structure </li></ul><ul><li>Outreach Indicators </li></ul><ul><li>Overall Financial Performance </li></ul><ul><li>Revenue </li></ul><ul><li>Expenditure </li></ul><ul><li>Efficiency </li></ul><ul><li>Productivity </li></ul><ul><li>Risk & Liquidity </li></ul>18/05/11
  • 3. Understanding Financial Statements 18/05/11 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.
  • 4. Actions for understanding Financial Statements 18/05/11 Actions for improving understanding of financial statements <ul><li>Resources: Rural Finance on-line, ‘Buddy’, others </li></ul><ul><li>BY WHEN </li></ul>1. 1a 1b 2. 2a 2b 3. 3a 3b 4. 4a 4b 5. 5a 5b
  • 5. Financial ratios for NOWHERE 18/05/11 List 5 KEY ratios Comments 1. 1. 2. 2. 3. 3. 4. 4. 5. 5.
  • 6. Nowhere Ltd 1 18/05/11 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
  • 7. Nowhere Ltd 2 18/05/11 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
  • 8. 18/05/11 Nowhere Ltd 3 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 10,580 Portfolio 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 176 150 203 Delinquency 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
  • 9. 18/05/11 Balance Sheet: Statement of Affairs <ul><li>ASSETS (Use of Funds) </li></ul><ul><li>? .................. </li></ul><ul><li>? .................. </li></ul><ul><li>? .................. </li></ul><ul><li>? .................. </li></ul><ul><li>? .................. </li></ul><ul><li> --------------- </li></ul><ul><li>Total --------------- </li></ul><ul><li>Source of Funds </li></ul><ul><li>? ................ </li></ul><ul><li>? ................ </li></ul><ul><li>? ................ </li></ul><ul><li>? ................ </li></ul><ul><li>................ </li></ul><ul><li>Total ................ </li></ul>
  • 10. 18/05/11 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 ?
  • 11. MIX Market <ul><li>http://www.mixmarket.org/ </li></ul><ul><li>Examples: Grameen, CASHPOR </li></ul><ul><li>Assignment: Look on the MIX Market at a MFI in your case study country. </li></ul><ul><ul><li>List which of the key ratios are reported </li></ul></ul><ul><ul><li>What are the pros and cons of the MIX Market for finding data on MFIs? </li></ul></ul>18/05/11
  • 12. 8. Financial Planning & Budget 18/05/11
  • 13. Session 3: assignment <ul><li>Preparation for Session 4 and Your MFI case study </li></ul><ul><li>Rural Finance on-line Lesson 7. Understanding the accounts of financial service providers </li></ul><ul><li>http://www.microfinancelessons.com/about/lesson7.html </li></ul><ul><li>Read Power Point handout: Session 3 Assignment: Building Blocks for MF </li></ul><ul><li>Pair up with a ‘ buddy ’ to work on your microfinance case study </li></ul><ul><li>Course assignment: step 1 </li></ul><ul><li>Choose a country, region or city you want to research for a microfinance project. </li></ul><ul><li>You will produce a report to present to the group in Session 7 </li></ul><ul><li>Summary Session 3: Measuring Performance </li></ul><ul><li>Financial Structure </li></ul><ul><li>Outreach Indicators </li></ul><ul><li>Overall Financial Performance </li></ul><ul><li>Revenue </li></ul><ul><li>Expenditure </li></ul><ul><li>Efficiency </li></ul><ul><li>Productivity </li></ul><ul><li>Risk & Liquidity </li></ul>18/05/11 Practical Microfinance Session 3/7: MF Building Blocks
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