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As the outset I express my deep sense of gratitude to Mr. Khirod Chandra Malick, Chairman, BISWA for he gave us the pleasant opportunity to carry out my project in his organization. I take the opportunity to offer my sincere feeling gratitude to Dr. Jharana Mishra , Manager of Research and Documentation Cell of BISWA for her kind cooperation and guidance in bringing out this project report. Also I will be very happy to thank to the staff members of BISWA for their kind co-operation. At last I am very much thankful to my project guide and Ms.Ruchi Srivastav (GCM) for his kind co-operation during my study work .
Swagatika Nayak ( GCM , SBP)
MBA 1st year
BISWA financial management –A case study
I do here by declare that the Summer Internship Project Report entitled “Financial statement analysis of BISWA” prepared & submitted by me and this report is completely of my own study with the kind guidance of Dr. Jharana Mishra , Manager of RDC in BISWA, head office , Sambalpur and has not been submitted to any other institute or published in any other format any time before. This report of “Financial statement analysis of BISWA” is studied in BISWA, Sambalpur to fulfill of Master Degree in Business Administration.
Swagatika Nayak MBA 1st year
BISWA financial management –A case study
Finance as a subject of study has received widespread support from both the academic and business segment people. The topic “Financial Statement Analysis of BISWA” in Bharat Integrated Social Welfare Agency, was selected as to understand the financial needs and importance with special reference to BISWA , Head office , SBP. As the Financial Statement refers to the administration of all aspects of Comparative Balance Sheet, Common size balance sheet, Trend Analysis and Funds flow statement, the main reason of this study is to know how the organization is managing, planning and controlling the Financial Statements. Even efforts have been made to collect relevant information about the topic. This present study of Financial Statement Analysis in BISWA, is based in Finance and Accounts Department of BISWA. This training attends us an opportunity to make a study and analyze the system adopted by the organization. It enables us to build the practical knowledge acquired during the class study with practical training received during my project work.
Dr. Jharana Mishra Manager , RDC
Mr. K.C. Malick Chairman , BISWA
BISWA financial management –A case study
CONTENTS CHAPTER-1 (INTRODUCTION) INTRODUCTION SUBJECT PURPOSE OF THE STUDY PLACE OF THE STUDY SCOPE OF THE STUDY LIMITATION CHAPTER-2 (ORGANISATION PROFILE) INTRODUCTION MISSION OF BISWA FUNCTION OR ROLE OF BISWA STRUCTURE HOW BISWA GET FINANCE? HIERARCHY OF BISWA. ACHIVEMENTS CHAPTER-3 (FINANCIAL STATEMENT ANALYSIS OF BISWA) MEANING AND CONCEPT OF FINANCIAL ANALYSIS OBJECTIVES METHODS LIMITATION SUGGETION CONCLUSION BIBILIOGRAPHY BISWA financial management –A case study .
CHAPTER-1 (INTRODUCTION) INTRODUCTION SUBJECT PURPOSE OF THE STUDY PLACE OF THE STUDY SCOPE OF THE STUDY LIMITATION BISWA financial management –A case study .
carry out its operations.INTRODUCTION Finance is defined as the provision of money when it is required. The organization has the strength to fulfill its current obligation or not. Growth rate of BISWA. Every enterprise needs finance to start. Finance is the life blood of an organization. Second task is to arrange the information in a way to highlight significant relationship. The analysis of financial statement is a process of evaluating the relationship between different parts of financial statement. Final task is the interpretation and drawing of inferences and conclusion OBJECTIVE OF THE STUDY • • • • • • The present study is made as a part of the MBA program for summer training in the form of on the job training with following activities To know the financial position of the BISWA. So. First task is used for the analysis to select the information for taking decision. Performance of BISWA for granting credit providing loans and making investment. Profit & loss account and other operative data. BISWA financial management –A case study . Find out strength and weakness of the BISWA. SUBJECT Financial statement analysis refers to the process of determining financial strength and weakness of the firm by establishing strategic relationship between the terms of the balance sheet. Financial statement is used for decision making by various parties are in them. finance should be managed effectively.
PLACE OF THE STUDY The complete project is done in BISWA, head office, Sambalpur. SCOPE OF THE STUDY Keeping the magnitude of the work in mind, the scope of the study has been determined. It covers the outset, a description of the role played by the organization in improving its financial strength. The study has emphasized financial statement analysis and its various applications. LIMITATION The study solely depends on reliability of the data and information collected from the secondary sources. It is not possible to collect information on all activities taken over the year. Thus the study incorporates on limitation that is inherent in the available published information. • • • The analysis is purely mathematical in nature and ignores management factors like motivation. The study is purely based on the data in the form of Annual Reports and Appraisal Reports. The overall performance is taken into consideration without taking into account the individual values.
BISWA financial management –A case study
CHAPTER-2 (ORGANIZATION PROFILE)
INTRODUCTION MISSION OF BISWA FUNCTION OR ROLE OF BISWA ACHIVEMENTS STRUCTURE AND PROFILE HOW BISWA GET FINANCE HIERARCHY OF BISWA
BISWA financial management –A case study
INTRODUCTION BISWA is a community based organization in the voluntary sector. It is an organization working directly with the poor and marginalised. The organization is registered under society registration acts XXI of 1860 and FCRA 1976.BISWA is also exempted under section 12A and 80G -5(F) of the Indian income tax act. The organisation BISWA started from the district of Sambalpur. Today’s through it considerable efforts the organisation stands a cross road. With its integrated approach it has emerged as one of the successful organisation in social NGO sector Through its holistic approach it has bring development by its tools of microfinance, micro enterprises, micro insurance and micromarketing. Its development programme is for poverty eradication, livelihood promotion, basic health services, water & sanitation, education, social marketing, natural resource management etc. Mr. Khirod Chandra Malick, Chairperson, BISWA is the founder of Bharat Integrated Social Welfare Agency. While working in the western Orissa as a Banker visualized the impact of poverty in the western Orissa. This was his turning point where he had an inner urge to start a philanthropic organization. Thus BISWA was born with a very well defined mission & vision. It is now fully committed towards sustainable development of the people with special emphasis on women. During this period BISWA has expanded to the other states thereby acquiring a status of a prominent national level NGO. At present it has decided and planned to create one million employment opportunities by March 2011 and bring down poverty level to 20% by that time
BISWA financial management –A case study
MISSION To make real and lasting social. economic.” AIMS.OBJECTIVE To Mobilize Public opinion and generate resources for supporting development action on a sustainable basis with complete community participation. BISWA financial management –A case study . STRUCTURE OF BISWA BISWA has extended it working in different sector for the well being of poor and downtrodden people. They are called the five pillars of BISWA. psychological and spiritual impact on individuals. help build strong cohesive communities and generate substantial productive employment opportunities by increasing availability of a wider range of services.
1. irrigation etc. Diarrhoea and other water borne illness thrive where people don’t have safe water. sanitation and hygiene to the needy people. Microfinance 3. socially and economically to live in harmony and peace. Ensuring reliable and affordable services can reduce illness and death from diarrhoea and other water borne diseases. a. SOCIAL DEVELOPMENT BISWA has entered into social development sector to empower community member educationally. adequate sanitation facilities. Micromarketing 1. sanitation and hygiene. Micro insurance 4. Increase economic opportunities for household and communities improve school attendance especially by girls BISWA APPROACH BISWA is well known identified as the key resource centre for water and sanitation mission in western Orissa. Micro enterprises 5. ground water harvesting for water autonomy. One quarter of all childhood death is causes by unsafe water. Every year 2 to 4 million people die from diarrhoea and other water related diseases. The activities includes individual house hold latrines. extending swajaldhara . BISWA financial management –A case study . Our organisation is socially working in the following sector. Water & Sanitation Programme Water and sanitation means to provide safe water. Social development 2.
Toilet under subsidy only available to BPL families. information about HIV / AIDS are provided.2200 TSC subsidy scheme. administration and RWSS official is required. Health camps are also been organised in different district to provide health awareness among people and also the services like Rehabilitation & Re. Dist. Nutrition . BISWA has an implementation root chart to water and sanitation mission to achieve the projected goals i. Education and shelter . To achieve above goals continuous liasioning with the panchayats.integration . Health BISWA is implementing reproductive & child health programme of govt. Within one month of completion of toilet construction. Apart from this 2000 of awareness camps have been organised to reach out 100000 number of household. Individual toilets are promoted under Rs. Health care also been taken through hospital tie-up with insurance cover. construction of 1 lacs toilet by March 2010. block offices. Further drug distribution centre are also established. BISWA is keeping close contact with the govt and with the help of them individual house hold latrines are provided to the needy people. During the last quarter 636 no’s of SHG have constructed 30223 of toilets in 405 villages under our initiatives. Further 15 villages have been considered for Nirmala gram through our efforts. newborn and child health . So many Eye camps are also organised. BISWA ensures the release of subsidy from Govt.e. Of India. Further this organisation is ensuring swajaldhara. Prevention effort . ground water harvesting. By its 150000 people has been benefited by it in Sambalpur district. b. Key player of BISWA water and sanitation programme BISWA financial management –A case study . innovation . Further it is looking after the irrigation facilities of poor villagers for cultivation.It supports the government in reaching rural household to ensure that the govt programmes are bringing the real benefit to the poor. Maternal .
IMPACT –ECONOMIC INTERVENTION 1. BISWA SHG earn profit from the construction work 2. BISWA ensure the release of subsidy from government within one month of completion of toilet construction 2. Any technical problem is mitigated through the civil engineers working in BISWA water and sanitation department. Sarpanch consent letter for availing subsidy 2. BISWA 3. 3. phenyl and broom making units. Ensuring active involvement of the PRI member 3. Selection of beneficiary A SUSTAINABLE WATER SANITATION INTERVENTION 1. Government Role of BISWA 1. the community organiser is continues the sustained hygienic education. Selection of the potential SHG BISWA & SHG 1. BISWA financial management –A case study . As per the BISWA administrative structure. 4. Selected SHG undergo mason training 3. Selection of the villages 2. Subsidiary enterprises are created like the soap. SHG 2. Sanitation credit can be in many cases precedes/supplement or follow credit for subsidiary enterprises creation.1.
3. To promote saving and credit activities. In consequence they are pushed to extreme poverty. so microfinance is a burning illustration to make viable to the poor. So for this 90% of rural poor are deep in debt. Promotion of income generation program in self help group. Discussion of many issues pertaining to their socio-economic educational and health status. BISWA financial management –A case study . 2.2. Small loans for the business are provided and collected through individual member in SHG. To promote employment of group member in to production unit. As a result. The marginalised poor develop their business and manage to live a decent life. SELF HELP GROUP SHG is group of rural poor who have volunteered to organise themselves into a group for eradication of poverty of the members. In India many are poor because of one simple reason that is lack of regular income. This approach is very powerful in lifting communities from economic poverty. As a result of such economic development initiatives many small business expand and become viable. Nearly 40% of India population lives in poverty. poor families have enough to feed their children and send them to school. ultimately leading the community to be self-reliant and live with dignity. share and built capacity. The members are agreed to save regularly. The object of SHG is 1. So BISWA facilitates formation of SHG to save. MICROFINANCE Microfinance is a small finance ensuring financial services at affordable interest rates for the poor and the needy at their door step. resulting increasing household income and saving. 4. At last they turn to money lender who charges 60% to 120% interest per annum or even more.
The member in the groups meeting should take all the loaning decision through decision making process. bank pass book and individual pass book. fix repayment schedules. Build confidence among the women group member for better decision making and it will leads to participate and contribute in general social and political matter in their respective villages including women right. fix appropriate rate of interest for the loan advances. The group should able to draw up an agenda for each meeting and take up discussion as per agenda. All members of the groups should belong to family below poverty line. The saving collected will be group corpus fund.e. A person should not be a member of more than one group. The member should have regular saving. attendance register. weekly in democratic manners. The group should not consist of more than one member of the same family. cash book. The groups should be in the form of regular meeting i. Generally a self help group is consists of 16 to 20 persons.5. The groups should be able to prioritise the loan application. The groups should maintain basic record like minute book. The groups should operate a group account preferable in their service area bank branch so as to deposit the balance amount left with the groups. general ledger. They should be able to monitor the repayment of the loan instalment for time to time. They should collect it from all members regularly in the group meeting. The group corpus funds should be used for advance loans to the members. They should be allowed free exchange of views. BISWA financial management –A case study . participation by the members in the decision making process.
weather catastrophes etc. of Loan Outstanding.829/. MICROINSURANCE Micro insurance is protection of poor people and their families against specific perils like death. illness. Micro insurance require an intermediary between the customer and insurance company. For these poor micro insurance is a form of risk management saving and credit may help people cope BISWA financial management –A case study . BISWA is operating its microfinance programme at 65 districts in 11 states of India.1. Poor people often live in an area prone to flooding or work in factories under very hazardous condition.148 3. The NBFC is registered under RBI.29090 Amt of Loan Disbursed – 3.20682 Amt of Outstanding .12.16.179. of Loan Disbursed .3.829 No. Total SHG formed .BISWA APPROACH Organisation BISWA has already extended credit worth Rs. In principle micro insurance work like any typical insurance business. That it is a group insurance that can cover thousand of customer under one contract.92.to 31180 SHG’s with 499707 members up to September 08. The fact that they have little money to respond to those risks makes them even more vulnerable.304.612. 92. BISWA has also promoted a non banking financial company (NBFC) to upscale its credit operation.31180 Total Member enrolled – 499705 Total Federation Formed. Preferable this intermediary is a non government organisation (NGO) or microfinance institution.233 No.
As one of the development intervention and social security’s measure BISWA cover its client in three major micro insurance schemes. 1. For health with (Oriental Health Insurance) 3. According to the study the rural poor not only want insurance to be affordable. death insurance. health insurance. insurance for natural disaster etc. but also to protect against high frequency risk such serious ill health.with minor and foreseeable financial hardship. Micro insurance serves to cover expensive and infrequent risk such as hospitalisation. These includes both health risk (illness. The percentage of poor lives insured hovers below 3%. For life with LIC (Janashree Bima Jojana) & TATA Aig 2. accident. insurance for theft or fire. For asset with (Oriental Insurance Company) BISWA financial management –A case study . injury or death) our property risk (damage or loss).5 billion poor are now covered by some form of micro insurance. In India and china where organisations are estimated to serve nearly 30 million insurance clients each. such as education cost. BISWA APPROACH Poor households are especially vulnerable to risk during natural calamities. disability insurance. Microfinance institution like our BISWA has played an active role in protecting them against such situation by providing credit support for increasing income earning opportunities. Most remain without access to this critical financial service. It is estimated that only eight million out of the world 2. livestock/cattle insurance.A wide variety of micro insurance product exist to address these risks including crop insurance. harvest failure and fire. Micro insurance like regular insurance may be offered for a wide variety of risks. Small emergencies our regular occurrences of illness and accidents. term life insurance. death or disability.
To understand the relevance of marketing in promoting micro enterprise.257 and asset of 92. This programme is being to train the middle our higher level functionaries of different NGO. Objectives The principle objectives of the programme on promotion and development of micro enterprises are 1. During the last few years. In manufacturing sector investment in plant & machinery does not exceed five lacs rupees in case of service sector investment in equipment does not exceed ten lacs rupee is called micro enterprises. So that they can understand the concept of micro enterprise development.So far as on September 2008 life of 95. business planning and feasibility analysis. 4. Micro enterprises plays a critical role in the economic development of any economy. Self employment through micro enterprises can play a considerable role in poverty alleviation for the millions of poor on our country. MICROENTERPRISES In accordance with the provision of micro small and medium enterprises development (MSMED) Act 2006. 4. 3. entrepreneurship and microenterprise. To understand the concept of livelihood. To impart the knowledge among the participant about the various tools used for livelihood analysis. The programme is being organised to take the learning back to the community level to generate employment and fight poverty. 2. To sensitize the participant on the need to analyse the business environment for proper use of the concept and tools. NGO have begun to play a significant role in facilitating the poor to increase their income level through micro enterprises.89.339 members are also insured under ICICI Lombard and Oriental Insurance Company. BISWA financial management –A case study .411 members have been insured under JBY (LIC) and TATA Aig health of 1. identification of business ideas.
handlooms and cottage industries. Market for minority community 5. BISWA financial management –A case study . Strengthens of small and microenterprises among minority community. Skill development of artisans 3. BISWA APPROACH Aims at creating entrepreneurial attitude reducing income poverty and generating opportunities for self employment. delivery of credit to the needy. Formation of network among artisans 4. Examine the structural characteristics of SHG that are emerging in the rural credit market. Under this programme BISWA has already optimised resource support to more than 1 lakh skilled entrepreneurs in Orissa alone. To explore the effectiveness SHG in indentifying nurturing entrepreneurial talent among the poor and providing escorts services in micro enterprises development. Promotion of handicraft. 7. Establish of common facility services support centre 7.5. Besides promoting agro and forest based microenterprises three common facilities centre for the artisan have also been established. Its strategy:1. 6. In order to developed local institute through promotion of SHG 2. recovery of loan over dues and linking process with banks. 6. To analyse the operating system in SHG for mobilisation saving. BISWA is to promotion of the microenterprises development institute (BMEDI) a resource centre for development of micro enterprises. Numerous vocational training programmes including various artisans development programme have been conducted by BISWA with the joint effort of partners including the government.
Without micromarketing the existence of microenterprise is stop ahead Objectives 1. national and international level. dhokra. regional. Achieve economies of scale through collective action for increase production and marketing. Individual brand by the name Laxmipriya for BISWA agro food product. Micromarketing is interrelated with microenterprise. leaf plate/cups etc. Odissi for BISWA household product and Shilpika for BISWA artisan’s product have been developed and registered under trade mark to promote micromarketing in local.5. They are selling variety of items like tailor made garments. 2. It is not only help poor to enhance their livelihood income but also brings economic and social support in their lives. and national/international market. MICROMARKETING Developing large scale micro enterprises both in urban and rural areas and linking them with market forms to be one of the key strategies in poverty reduction programme. BISWA APPROACH Marketing of SHG product has possible with a chain of marketing outlet named Laxmipriya. handicraft and handloom. 3. Diversify in to higher value products that are linked with export global market. About 2000 SHG’s linked with Laxmipriya outlet. brass and metal. BISWA financial management –A case study . process food material. Improve the competitiveness of SHG products in the local.
Lack of proper monitoring at partners level 2. • The Community Organizer is the first line Person in the BISWA structure working at the grass root level under a Branch. District Manager. A loan in arrear is a loan which payment is past due. Tenure of loan at institutional level 5.Single window system • The Single Window System of BISWA is aimed at providing all support through one window that is through its branch office by a community organizer working at the grass root for the holistic development of the Community covered under the branch. Delinquency occurs when loan payment is one day late. Reasons behind delinquency 1. Repeat loan is not on time 7. DELINQUENCY MANAGEMENT What is Delinquency? The situation is that occurs when loan payment are past due. Loan diversion 4. Credit policies at partner level not properly defined 3. Branch Manager. Zonal Manager and Head Office Structure. It is also referred to arrear or late payment. Partners not getting loan at the time of requirement 6. Followed by Area Manager. Capacity building support should be provided BISWA financial management –A case study . Delinquent payment in arrear is loan payment which is past due. measure the percentage of a loan portfolio at risk.
Multiple loan at SHG level 13. Migration 17. Poor investment opportunity at client level KEYS ELEMENT OF DELINQUENCY PROMOTION 1. Skilled and experienced staff 19. Govt. Lack of good governance 12. Prevention is better than cure 2. Policies 18. Programme image and philosophy BISWA financial management –A case study . Poor loan appraisal 11. Conceptual clarity on MF 23. Overlapping of MFIs 15. People lost business external factors 16. Proper utilisation of loan 10. Individual V/s Group lending 22. Low absorbing capacity of the client 14. Dependency on one source 21. Consumption loan is more 20. HR Policies 25. Need assessment at the grass root level is not proper 9. Poor MIS 24.8.
Management must ensure that a proper internal control structure is instituted. Relevant detail for level of use(BOD. loan portfolio. improves client service. Reliable. accurate. (I) systems of accountability along with prevention of errors and irregularities.STAFF) 3. ensures reliability of financial information and staff adherence to management policies and guidelines.g. and (ii) systems of detecting errors and irregularities. It must satisfy three basic criteria: They must be appropriate (that is. Borrower selection 2. Cost effective INTERNAL CONTROL It is a set of integrated methods and procedures translated into regular and periodic activities that preserves safety of asset (e. It ensures. and updated to keep it effective.METHODOLOGY 1. They must function consistently as planned throughout the period (that is. cash and other physical assets etc). Incentives INFORMATION SYSTEM 1. be complied with carefully by all employees involved and not bypassed when key personnel are away or the workload is heavy). Relevant and timely dissemination 4. Loan size terms 3. the right control in the right place and commensurate to the risk involved). reviewed.MGMT. timely data 2. BISWA financial management –A case study .
They must be cost effective (that is. Write-off: Write-offs occur only as on accounting entry. To minimize the risk factor MFIs should link internal control to risk management. The Governing body of BISWA is the competent authority to write-off any loan. Any amount pending more than 3 years will be treated as written off. Risk management is the process of assessment of relative risk and ensuring that controls are present and effective.It does not mean that loan recovery should not continue to be persued . losses charged or write-offs occur when it is determined that loans are unrecoverable. the cost of implementing the control should not exceed the benefits derived). It covers prevention of potential problems and the early detection of actual BISWA financial management –A case study . RISK MANAGEMENT FOR MFIs Risk is intrinsic in MFIs mode of operation for providing financial services. BISWA will make a loanloss provision of 1% of the loan outstanding on an annual basis and create the loan loss reserve over time to meet the eventuality which is also known as Ageing. Loan loss Provision: Loan losses . They do not mean that loan recovery should not continue to be pursued. PORTFOLIO MANAGEMENT Quarterly Trends in disbursements and portfolio quality: The manager operation (planning and control) in close association with chief manager IT will analyse the disbursement pattern and the portfolio quality on a quarterly baaia and prepare a report for management.
sincerity with good reputation should be the basis for selection of board members. Risk management of MFIs has different dimensions as follows: 1. clear procedures and documentation of board meetings are essential. b) Financial Risk: (i) Portfolio Risk. guide an MFI in fulfilling its corporate mission while protecting the MFI’s assets. Governance Risk Management Risk: a) Operating Risk. Management Risk BISWA financial management –A case study . As board members do not have a material stake. commitment. 2. in competent. Well defined.problems when they occur. (ii) (iii) Liquidity Risk and Interest Risk Risk Management Governance Risk Operating Risk Portfolio Risk Interest Risk Management Risk Financial Risk Liquidity Risk Governance Risk Governance is a process by which Board Members. through management.
Clear and transparent operational guidelines and policies. can help to develop a good system of internal control to mitigate management risk of MFIs. experience. so that results can be related to individuals. Appropriate recruitment and reward-punishment systems are of utmost importance in these regards. Physical Safeguards: Access to resources and records is to be limited to authorized individuals who are accountable for their custody or use. Management risk can be broadly divided into two categories as follows: 1. and reliability. internal control to management risks refers to both administrative control and accounting control. staff responsibilities. organizing. financial. responsibility. and controlling) directed at an MFI's resources (human. and field-workers sign savings/loan pass books and group attendance-registers etc. such as: organograms. accounts-keeping formats etc. The entire operational system deserves surveillance by management to see if it is working as prescribed and if changes are warranted. self-reliant and sustainable organization.Management plays a key role behind the success or failure of MFIs through a set of activities (including planning and decision making. functions of different sections. In its broadest sense. BISWA financial management –A case study . Steps for reduction of operating risks are: Reliable Personnel with Clear Responsibilities: Individuals must be given authority. interests. accountant’s initial cash book/general ledger. errors and unforeseen contingencies. Responsibility means tracking actions as far down in the organization as is feasible. and information) for a costeffective. inefficiency.Operating Risk Operating risk refers to the risk of losses or unexpected expenses associated with fraud.. physical. It means having field-workers/supervisors sign MIS report. and duties commensurate with their abilities. To ensure accountability. leading. Communication : Regular co-ordination meetings to be held frequently at the central as well as at the field level with a view to having a clear analysis of the problems that arise in the course of implementation of the programs. the resources are to be periodically compared with the recorded amounts.
ADC are advised to maintain properly the group detail register. 6. BISWA financial management –A case study . Rotation of Duties: To avoid risk key people handling cash or inventories should have job rotations. inventories. and restricted access to assets. 7.ADC. New loan taken to pay other loan.Representative from Head Office must present during disbursement of loan.ADC are advised to make critical appraisal of loan application. and records are minimized by safes. Thefts of SHG saving by staff. locks. New loan granted to hide arrears. 4.Once collection is not made during any month from any loanee group then ADC & AC are advised to visit the same group for collection. Loan distributed by proxy-ADC must present at time of loan disbursement to avoid proxy. Create false group and misappropriate by employee. 3.Losses of cash. POs should take special precaution for preserving cash in vaults. DC & Staff from Head Office are advised to make visit to all groups. Loan amount being shared between borrower and staff. Loan amount collected from groups for personal use with the intent to pay them later. 2. DC must confirm the outstanding balance. Where most frauds and forgeries occur & its remedy: 1. 5. if there any in DC office & Head Office. Documents should also be kept in lockers. guards.Before Sitting of loan committee.
Offsite monitoring tools for analyzing MIS reports with particular focus on loan portfolio quality. Regular Internal supervision (degree of supervision on both field workers and samiti member borrowers). and portfolio risk management guards against potential losses resulting from the poor quality of the organization’s loan portfolio assets. Capability of Chief Executive 9. any action to increase the expected returns of an MFI will also increase its risk structure. 2. Multiple loans to the Individual group members. Skill of field workers (including Branch managers) 5. Accuracy of MIS report 10.Financial Risk Asset and liability management refers to the financial risk management of an MFI. Program placement 2.8.ADC are advised to make critical analysis of loan application. Incentive base for management staff and employees. Sanity management 3. 7. Loan disbursement and recovery system 4. The following factors are directly related to maintaining the desired quality of loan portfolio. The major categories of asset and liability management risk that an MFI needs to consider are: • Portfolio Risk The primary revenue-earning asset of a micro credit organization is its portfolio. 1. Generally. 6. • Interest Rate Risk BISWA financial management –A case study . Sound Governance 8.
term deposits. This results in a funds gap. There are five basic steps in the design of an internal control system. • Liquidity Risk Liquidity management and cash flow management are often used interchangeably. Step 1: Define and describe the objective of the internal control system in the operative context of the MFI by using the performance standards benchmark. This can be avoided through a budgetary practice. collections. liquidity management includes the management of not only cash but also other short term assets and short term liabilities. and so on). Gap positions will have to be managed effectively to maintain (or achieve) financial sustainability. for example. Interest rate risk is primarily of concern to MFIs that mobilize deposits. and specify staff positions and responsibilities. payments and recording of such transactions. STEPS FOR DESIGNING INTERNAL CONTROL SYSTEM Once an MFI’s management identifies its sources of risk. and debt repayment. Step 3: Determine tasks that need crosschecks or verifications to prevent error or fraud. provide a chart of accounts. while liabilities are frequently long term (concessional loans). In fact. if demands for funds are readily met while balancing the need to earn revenue. bill payments. it can design measures for an effective system of internal controls. Particular attention should be paid to the guidelines for inspection and internal auditing.Interest rate risk arises when interest rates on assets and interest rates on liabilities (which fund the assets) are mismatched. In MFIs assets are frequently short-term (loans. and / or have relatively long term loans (of greater than one year). and separate them. BISWA financial management –A case study . Step 4: Create an annual work plan to implement the internal control system delegating assignments among staff. detail organizational structure and procedures. Step 2: Describe the system: list services offered. include a flow chart of operations. An MFI is in a liquid position if it is able to meet its current obligations as they become due.
USA INTERNATIONAL PARTNERS: BISWA financial management –A case study . The Netherlands Pepsico Foundation. USA UNIDO UNICEF Orissa Foundation. USA HIVOS.Step 5: Organize the internal control system so that each step is linked with some detailed control documents that are cross-checked by an assigned person or team. USA Asha for Education. Ltd Vedanta Alumina Ltd Orissa Cement Limited Utkal Alumina Limited HCL ITC SEEDS. How BISWA get finance: BISWA get finance from both of its national and international partners. Some of the names are: NATIONAL PARTNERS • • • • • • • • • • • • • • • • • • NABARD Central Social Welfare Board National commission for Women Family Planning Association of India Orissa State Social Welfare Board Coca Cola India PVT.
reduction of hunger and deprivation among women and children in India. Bharat Jyoti Award .ACHIEVEMENTS: In the year 2010 BISWA was awarded by P J Group of institute BBSR as a token of appreciation and excellence. • • Global Microfinance Impact Award by SAMBODHI for excellence in Chosen field of activity Prakruti Bandhu 2009 by District Adminstration. In the year 2008 BISWA was awarded with. Vikash Ratna Award . Think Orissa Leadership Award . BISWA financial management –A case study .2009 by TEFLAS as BISWA is selected as the Best for its strategies adopted for poverty alleviations. Sambalpur for excellence in chosen field of activity. • Environment Awareness Award by IMF(International Media Foundation). by Modern Organisation for truth harmony & Economic reality for its Involvement in Social activities. by India International Friendship Association for its for Outstanding Social Work. In the year 2009 BISWA was awarded with: • • • • Mother Prativa Sanman Award . New Delhi for Outstanding contribution in the area of Global Environment Awareness. by Sulabh International For Outstanding Services Achievement & Contributions.
Bharat Gourav Award by Economic for Health & Education Growth On the occasion of 27th National Seminar on “Individual Achievements & National Development” • Bharat Navanirman Ratna Award by All India Business Development Association for excellence in Chosen field of activity.for Nation’s Health & Education growth through individual contribution. Rastriya Gourav Ratna Award 2007 by IHRDA. BISWA financial management –A case study . In the year 2007 BISWA was awarded with: • Micro Insurance Award 2006-07 by Planet Finance and ING Vysya Bank As best shine in the Micro-insurance Sector 2006-07.• • • • • • • • • • Rashtriya Udyog Sanman Puraskar by ISID (Indian Society for Industry & Intellectual Development for Individual achievement and intellectual excellence and National development. Ratan Jyoti Award by Economic Growth Society of India (New Delhi) for contribution towards economic growth of society. National Status Award for Intellectual Development 2007 by IPEGA ( Intellectual people Economic Growth Association) State Level Science Award by 34th State Level Science Award for Outstanding Contribution in the field of Education National Business Leadership Award by Indian International Council for Industries & Trade for Outstanding leadership in business development. Rastriya Gourav Ratna Award 2007 by World Peace and Intellectual Development . New Delhi for outstanding Individual achievement & distinguished services to the nation. Lifetime Achievement Award for social development 2007 by Health & Education Development association. New Delhi for Outstanding intellectual development. Hong Kong 2008 Achiever’s Award by SARVODAYA Micro & Rural Insurance Solutions for popularizing and bringing Tata AIG Insurance to the villages of Orissa.
Memento ERC 2006 by ISTD ( Indian Society for Training & Development) In recognition of contribution of BISWA in governance Sector KM Memorial Award Conferred to BISWA by Nehru Institute of Youth Affairs for Outstanding Contribution in creating Environmental Awareness.• Memento for CASHE Programme by CARE INDIA In recognition of effective participation in the Credit and Savings for Household Enterprise( CASHE) Project of CARE India 1999-2006 • India NGO AWARD 2007 by The Resource Alliance and the Nand & Jeet Khemka Foundation for setting and promoting best practices in resource mobilization. BISWA financial management –A case study . accountability and transparency • • MPEA 2006 by Planet Finance and ABN Amro Bank for significant contribution in Microfinance India Achiever Award for Public Awareness Award by EHRDA(Economic & Human Resource Development Association for Outstanding achievement in Public Awareness In the year 2006 BISWA was awarded with: • • • Certificate of Participation by IDC and AFE for Participation in international training in value chain Programme design.
HIRARCHY OF BISWA BISWA financial management –A case study .
BISWA financial management –A case study .
CHAPTER-3 (FINANCIAL STATEMENT ANALYSIS OF BISWA) MEANING AND CONCEPT OF FINANCIAL ANALYSIS OBJECTIVES METHODS LIMITATION CONCLUSION BIBILIOGRAPHY BISWA financial management –A case study .
To assess the operational efficiency and managerial effectiveness. • • • • • • To make inter – firm comparision To make forecasts about future prospects of the firm. To help in providing suggestive measures towards improvement in decision making and control BISWA financial management –A case study . To assess the short term as well as long term solvency position of the firm. To identify the reasons for change in profitability and financial position of the firm. And it refers to the process of determining financial strengths and weakness of the firm by establishing strategic relationship between the items of the balance sheet . To assess the progress of the firm over a period of time. profit loss account and other operative data. ability to pay interest and debt maturities and profitability of a sound dividend policy. The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. Financial statement analysis is an attempt to determine the significance and meaning of the financial statement data so that forecast may be made of the future earnings.MEANING AND CONCEPT:The term Financial analysis is also known as analysis and interpretation of financial statements. OBJECTIVE: • • To assess the earning capacity or profitability of the firm.
COMPARATIVE STATEMENTS The comparative financial statements are statements of the financial position at different periods of time. Following methods of analysis are generally used: • • • • • • Comparative statements Common size balance sheet Trend analysis Funds flow analysis Cash flow analysis Ratio analysis A.METHODS OF FINANCIAL ANALYSIS: The analysis and interpretation of financial statements is used to determine the financial position and results of operations as well. A number of methods or devices are used to study the relationship between different statements. BISWA financial management –A case study . The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. Any statement prepared in a comparative form will be covered in comparative statements. An effort is made to use those devices which clearly analyse the position of the enterprise.
The changes in periodic balance sheet items reflect the conduct of a business. group of items and computed items in two or more balance sheets of the same business enterprise on different dates.e.The comparative statement may show: • • • • Absolute figures (rupee amount) Changes in absolute i. increase or decrease in absolute figures. The two comparative statements are • • Balance sheet Income statement COMPARATIVE BALANCE SHEET: Comparative Study analysis is the study of trend of the same items. Guidelines for interpretation: While interpreting comparative balance sheets the interpreter is expected to study the following aspects: BISWA financial management –A case study . Absolute data in terms of percentages Increase or decrease in terms of percentages Not only the comparison of the figures of two periods but also the relationship between balance sheet and income statement enables an in depth study of financial position and operative results.
various resources and surpluses. this will improve the liquidity position of the concern. BISWA financial management –A case study . cash at bank . The long term financial position of the concern can be analyzed by studying the changes in fixed assets. etc will enable the interpreter to see whether the profitability has improved or not. we should see the working capital in both the years. if the increase in long term sources is more than the increase in fixed assets then fixed assets have not only been financed from long term sources but part of working capital also has been financed from long term sources . If the increase in fixed assets is more than the increase in long term liabilities then part of fixed assets has been financed from the working capital. An increase in balance of Profit and Loss Account and other resources created from profits will mean an increase in profitability to the concern. bills receivables. The second aspect is about if the liquid assets like cash in hand . The excess of current assets over current liabilities will give the figures of the working capital . etc show an increase in the second year over the first year . On the other hand . the increase in working capital will mean improvement in the current financial position of the business. Long term financial position Profitability of the concern For studying current financial position or short term financial position of a concern. The study of increase or decrease in retained earnings. Current financial position and liquidity position. The decrease in such accounts may mean issue of dividend . An increase in current assets accompanied by increase in current liabilities of the same amount will not show any improvement iin short term financial position. debtors . long term liabilities and capital. issue of shares or deterioration in profitability of the concern. 2.• • • 1.
current liabilities and capital and reserves are given below: Current assets Cash and bank balance . commission receivables . sale of assets . sundry debtors . Loan to different projects . temporary restricted fund Security deposits. Loan to mallick carrier . provision for gratuity . corpus fund . the items regarding current assets . computers (less depreciation. security deposits Capital (add DKL eye hospital and transfer from projects) .As per the data collected from BISWA . loans and advances as non. surplus . provision for doubtful debts . damage. provision for purchase of material (food kiosks) . reserve fund for assets . recovery from buyout portfolio . Loan to SHG . vehicle loans . provision for audit expanses Loan from FFIs .current liabilities Capital and reserves Deposits Comparative balance-sheets of BISWA of the year 2005-06 and 2006-07 BISWA financial management –A case study . investment . stock of materials . advances . vehicle loan . loan from UBI bank(DKL eye hospital) . current liabilities . claims payable . accrued interest on portfolio and FDs . sundry creditors . loan from MF . advance for expanses Furnitures . fixed assets . TDS . funds and other receivables . loan from general fund . PF payable . refundable to projects . distribution of assets) Fixed assets Current liabilities TDS payable . interest receivables. fixed deposits . deposits with oriental insurance Loans and advances as non. receivables from BISWA general fund.
2.While long term liabilities to outsiders have relatively increased by Rs. 115. The comparative balance sheet of BISWA reveals that during 2006-07 there has been increase in fixed assets of Rs. 58.Financial years Fixed assets Current assets Current liabilities Loans and advances Capital reserves Interpretation: 2005-06 15334187.e. 368634586 i.37%.343071353.4 20464490 543076080. This further confirms that the organization has raised long term finances only for the current assets resulting into an improvement in the liquidity position of the organization.72%.877262.e. This fact depicts that the policy of the organization is using the long term sources in disbursement of loans to SHG.17%.78 For the financial year 2005-06 and 2006-07: 1. The overall financial position of the organization is satisfactory for this financial year.16.e.6 67107581. 4.16 886147433. an increase of 5.06.3 i. The current assets have increased by Rs. i. Reserve and surpluses have increased by Rs 1955384. And in other hand the current liabilities have increased by Rs.01 2006-07 16211449. 23610847. 3.95 978259989.77 and the organization has no corpus fund during the period which shows that the organization has gained its reserves operational activities.9 44075337.63%. Comparative balance sheets for the financial year 2006-07 and 2007-08: BISWA financial management –A case study . 63. i.e.89 610484678.3 65152197.
53.82 1248696503. i.29%. The comparative balance sheet of BISWA reveals that during 2007-08 there has been increase in fixed assets of Rs. And in other hand the current liabilities have decreased by Rs. 4.While long term liabilities to outsiders have relatively decreased by Rs.e.9 44075337.87.76 848078821. Reserve and surpluses have increased by Rs 344147496 and so also the corpus fund have increased by Rs.e.78 2007-08 22998326.38068612. This further confirms that the organization has disbursed a greater amount to SHGs and the adjusted amount of current asset is the recovery from the previous years.95 978259989.e. 270436513. i. 4.6786876. The current assets have increased by Rs.Financial years Fixed assets Current assets Current liabilities Loans and advances Capital reserves 2006-07 16211449.44%. 3. The overall financial position of the organization is satisfactory for this financial year. 23558127.2 i.64%.6 67107581.4.1 i. 340986270 which shows that the organization has utilized its reserves and surpluses to increase the credit worthiness of the organization.16 886147433.86%. an increase of 41. This fact depicts that the organization has brought lesser amount of long term loans from outsiders as compared to the previous year and also it has increased its fixed assets more as comparative to the previous years. 27. BISWA financial management –A case study .28 20517209.47 411255077.e.83 Interpretation 1. 2.
30694281. Reserve and surpluses have increased by Rs 118431 and so also the corpus fund have increased by Rs. It will help the organization in taking loans from outside sources.89 . 3.00 which shows that the organization has gained its reserves and surpluses from the operational activities. i. 754027829. 126.e. 2. 4.83 2008-09 53692608. 60.Comparative balance sheets for the financial year 2007-08 and 2008-09: Financial years Fixed assets Current assets Current liabilities Loans and advances Capital reserves 2007-08 22998326.9 i.82 1248696503.65 1916750851.74.01%. 28506143.93%.1068672029.25 529687044. The comparative balance sheet of BISWA reveals that during 2008-09 there has been increase in fixed assets of Rs. This further confirms that the organization has raised long term finances only for the current assets resulting into an improvement in the liquidity position of the organization. The overall financial position of the organization is satisfactory for this financial year.28 20517209.e.e. The current assets have increased by Rs. And also it has disbursed a greater amount to the SHGs.39%.23 49023353.46%. i.e.56 2002724333.16 Interpretation 1.47 411255077. Comparative balance sheet for the financial year 2008-09 and 2009-10 BISWA financial management –A case study . and in other hand the current liabilities have increased by Rs. 110500000.78 i.While long term liabilities to outsiders have relatively increased by Rs. It is utilizing the whole amount of long term liabilities to disburse the SHGs. 138.76 848078821. This fact depicts that the organization has increased its fixed assets and liabilities in a greater amount from the previous comparative years. an increase of 133.
45. 34.16 2009-10 63992261. 66.10 2585525535. i.661013809 i.13%. This further confirms that the organization has raised long term finances in a greater amount as compared to current assets and also with comparison to the previous years . 4.25 529687044. The comparative balance sheet of BISWA reveals that during 2009-10 there has been increase in fixed assets of Rs.44.95%.97 261582232.10278607.Financial years Fixed assets Current assets Current liabilities Loans and advances Capital reserves 2008-09 53692608. Reserve and surpluses have increased by Rs 23406505.e. BISWA financial management –A case study . i.e.23 49023353.The organization has raised this long term liabilities only for the current assets resulting into an improvement in the liquidity position of the organization.17 and so also the corpus fund have increased by Rs. 1323916918.65 1916750851.10 3326641251. 533. The overall financial position of the organization is satisfactory for this financial year. 2.1% and in other hand the current liabilities have increased by Rs.e. 225000000. an increase of 19.56 2002724333. The current assets have increased by Rs.00 which shows that the organization has gained its reserve and surpluses from the operational activities and that will be helpful for the organization by increasing its credit worthiness.33 Interpretation 1. 3.64 778093549.34%.220319735.While long term liabilities to outsiders have relatively increased by Rs.76 i.e. This fact depicts that the organization has increased its fixed assets in lesser percentage as compared to the previous years and also the total amount of liabilities is used in disbursement.
If a figure in other year is less than the figure in base year the trend percentage will be less than 100 and it will be more than 100 if figure is more than base year figure. TREND ANALYSIS : The financial statements may be analysed by computing trends of series of information. • • The figures of the base year is taken as 100 Trend percentages are calculated in relation to base year.B. Generally the first or last is taken as base year. Each year’s figure is divided by the base year’s figure. BISWA financial management –A case study . PROCEDURE FOR CALCULTING TRENDS: • One year is taken as a base year. This method determines the direction upwards or downwards and involves the computation of the percentage relationship that each statement item bears to the same item in base year.
46 152.TREND ANALYSIS FOR CAPITAL: Capital fund Financi al years 200506 200607 200708 200809 200910 91350770.20 100 Amount in Rs Trend percentage BISWA financial management –A case study .87 63404892.87 59888594.53 71859499.99 63404892.93 119.78 105.78 105.
148.100000000 90000000 80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 TREND ANALYSIS OF SURPLUS surplus Financial years 2005-06 2006-07 2007-08 2008-09 Amount in Rs nil 63500 1.08 954.48 BISWA financial management –A case study .794.15 Trend percentage 100 2825.018.22 3383.3 9 2009-10 606099.216.01 2.
3 886147433.821.2500000 2000000 1500000 1000000 500000 0 nil 2006-07 2007-08 2008-09 2009-10 TREND ANALYSIS FOR OUTSIDERS FUND OUTSIDERS FUND Financial years 2005-06 2006-07 2007-08 2008-09 1. Amount in Rs 543076080.511.924.078.37 BISWA financial management –A case study .726.16 354.17 156.5 848.47 Trend percentage 100 163.
02 510.2009-10 25 2771906308.41 3000000000 2500000000 2000000000 1500000000 1000000000 500000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 TREND ANALYSIS FOR LOANS GIVEN Financial years 2005-06 Loans given Amount in Rs 561877548.6 Trend percentage 100 BISWA financial management –A case study .
BISWA financial management –A case study .9 9 169.030.35 345.2006-07 2007-08 2008-09 2009-10 953854838.3 1.44 1.697.833.888.275.042.990.941.210.14 3000000000 2500000000 2000000000 1500000000 1000000000 500000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 C.98 2.76 215.6 480. COMMON SIZE BALANCE SHEETS A statement in which balance sheet items are expressed as the ratio of each asset to total assets and the ratio of each liability is expressed as a ratio of total liabilities is called common-size balance sheet.
103 0. An analysis of pattern of financing of BISWA in both the financial years shows that in financial year 05-06 is traditionally( own fund) more financed as compared to the financial year 2006-07. In the fy 2005-06 the organization was dependent more on its own funds as shown by the balance sheet.28% which shows that the organization has dependent more on the outsiders funds as comparisons to the fy 2005-06.851 Interpretation: 1. 2.728 4.087 0.457 10.Common.36% of the funds are proprietor’s funds and outsiders funds account for 89.64%.381 2006-07 1.So BISWA is utilizing the whole amount of the long term loans in disbursement to the SHGs more than the following year 3.255 86.43% of the total assets 4.286 6.625 98.439 97. In the fy year 2005-06 BISWA is maintaining less percentage of current assets than that of the fy 2006-07.size balance sheets of BISWA for the fy 2005-06 and 2006-07 Financial year Total assets = 100 Total liabilities= 100 Fixed Current deposits Capital and Current Loans and assets assets reserves liabilities advances 2005-06 2. Out of total investments 10.62% of the total assets while in fy 2005-06 fixed asset account for 2. And also the long term loans have increased in the current fy 2006-07.size balance sheets of BISWA for the fy 2006-07 and 2007-08 BISWA financial management –A case study . The analysis of various figures shows that in both the years BISWA have satisfactory long term and short term financial positions. In fy 2006-07 fixed assets account for 1. A close look at the balance sheets show that the investment in fixed assets have been financed from operational incomes in the financial years.363 3. In the fy 2006-07 proprietors funds are 6.419 88. Common.72% while outsiders share is 93.
286 6.12 Total liabilities= 100 deposits Capital and reserves 0. Common. 5. In the fy 2007-08 the organization was dependent more on its own funds as shown by the balance sheet.Financial year Total assets = 100 Fixed assets 1. In the fy 2006-07 fixed assets account for 1.66%.62% of the total assets while In the fy 2007-08 fixed asset account for 1.562 Loans and advances 88. An analysis of pattern of financing of BISWA in both the financial years shows that in financial year 07-08 . There is a greater increase in capital fund in the current year as compared to the following year .851 67. The investment in fixed assets have been financed from the operational income in both the financial years.72% while outsiders share is 93. is traditionally more financed as compared to the financial year 2006-07.33% of the funds are proprietor’s funds and outsiders funds account for 69.28% which shows that the organization has dependent less on the outsiders funds as comparisons to the fy 2006-07 2.127 31.728 3.751 Current assets 98.75% of the total assets . Out of total investments 31.625 1. 3.33 Current liabilities 4. BISWA is always maintaining adequacy of working capital because it has always higer amount of current assets as compared to the current liabilities. The analysis of various figures shows that in both the years BISWA have satisfactory long term and short term financial positions.419 1. In the fy 2006-07 proprietors funds are 6.size balance sheets of BISWA for the fy 2007-08 and 2008-09 BISWA financial management –A case study .60 2006-07 2007-08 Interpretation: 1.087 95. 4.
96 . It reveals that Capital fund puts a greater impact while taking loans from outsiders.33% of the funds are proprietor’s funds and outsiders funds account for 68. A close look at the balance sheets show that the the capital and reserve in fy 200708 is 31.11 2008-09 2.15 80.12 3.23 76 1.23.67%. An analysis of pattern of financing of BISWA in both the financial years shows that in financial year 2007-08 is traditionally more financed as compared to the financial year 2008-09. In the fy 2007-08 the organization was dependent more on its own funds as shown by the balance sheet. BISWA financial management –A case study .23% while outsiders share is 78.12737 31.33 1.25 17.33 and in the current year it has decreased to 21.77% which shows that the organization has dependent slightly more on the outsiders funds as comparisons to the fy 2007-08. 3. 2.59 21. In both the fy years BISWA is maintaining adequacy of working capital. In the fy 2008-09 proprietors funds are 21.562919053 67. The percentage of current liabilities is much less than the percentage of current assets in both the years.751920636 95. Simultaneously the long term loans and advances has decreased in the current year as compared to the following year. Out of total investments 31.Financial year Total assets = 100 Total liabilities= 100 Fixed assets Current assets deposits Capital and reserves Current liabilities Loans and advances 2007-08 1.81 Interpretation: 1.
The analysis of various figures shows that in both the years BISWA have satisfactory long term and short term financial positions.size balance sheets of BISWA for the fy 2008-09 and 2009-2010 Financial year Total assets = 100 Total liabilities= 100 Fixed assets Current assets 80. Out of total investments 35% of the funds are proprietor’s funds and outsiders funds account for 65%.126044611 0. In the fy 200809 proprietors funds are 21. Common.77% which shows BISWA financial management –A case study .25467572 deposits Capital and reserves 21. In the fy 2009-10 the organization was dependent more on its own funds as shown by the balance sheet.98929082 1. 12 2008-09 2.65 Loans and advances 77.23% while outsiders share is 78. An analysis of pattern of financing of BISWA in both the financial years shows that in financial year 2009-10 is traditionally more financed as compared to the financial year 2008-09.59287 9 2009-10 2.112123194 63.23 Current liabilities 1.08 7.4.152453923 17.89859 Interpretation: 1.79 34.
that the organization has dependent slightly less on the outsiders funds as comparisons to the fy 2008-09. The analysis of various figures shows that in both the financial years . 3. In both the fy years BISWA is maintaining adequacy of working capital. BISWA has satisfactory long term and short term financial positions GROWTH RATE OF BISWA OVER THE STUDIED FINANCIAL YEARS: Financial years Net long term investments =total assets- BISWA financial management –A case study . 2. The percentage of current liabilities is very much less than the percentage of current assets in both the years.
143. FUNDS FLOW STATEMENT: Funds flow statement either prospective or retrospective .292.current liabilities 2005-06 608228277. 2009-10 97 3 000 500 000 3 000 000 000 2 000 500 000 2 000 000 000 1 000 500 000 1 000 000 000 500 000 000 0 Net long terminves ents= tm total as ets current liabilities s 2 -06 005 20 -07 06 20 -08 07 20 -09 08 20 -10 09 D.619.3 4 2.084.43 3.3 2006-07 2007-08 2008-09 953252015.437.363. The purpose of the statement is to indicate BISWA financial management –A case study .895. setting out the sources and applications of the funds of an enterprise.446.232.7 1.
BISWA financial management –A case study . It helps in the formation of a realistic dividend policy It helps in the proper allocation of resources It acts as a future guide It helps in appraising the use of working capital It helps knowing the overall creditworthiness of a firm Limitations of funds flow statement: • It should be remembered that a funds flow statement is not a substitute of an income statement or a balance sheet. It provides only some additional information as regards changes in working capital • • It cannot reveal continuous changes It is not an original statement but simply are arrangement of data given in the financial statements • It is essentially historic in nature and projected funds flow statement cannot be prepared with much accuracy. Importance of funds flow statement: • • • • • • It helps in analysis of financial operations.clearly the requirement of funds and how they are proposed to be raised and the efficient utilization and application of the same.
As . • • Statement or schedule of changes in working capital Statement of sources and application of funds Statement or schedule of changes in working capital: Statement of changes in working capital is prepared to show the changes in the working capital between the two balance sheet dates. Procedure for preparing a fund flow statement The preparation of funds flow statement consists of two parts.• Changes in cash are more important and relevant for financial management than the working capital. This statement is prepared with the help of current assets and current liabilities derived from the two balance sheets. working capital= current assets – current liabilities An increase in current assets increases working capital A decrease in current assets decreases working capital An increase in current liabilities decreases working capital A decrease in current liabilities increases working capital • Statement of sources and application of funds: BISWA financial management –A case study .
Or. to proceed from the figure of net profit or net loss as arrived at from the profit and loss account already prepared.Funds flow statement is a statement which indicates various sources from which funds have been obtained during a certain period and the uses or applications to which these funds have been put dering that period.operating items which have been already debited to P & L a/c and to subtract all the non-fund/ non.versa. The balancing figure in this case will be either funds generated from operations or funds lost in operations depending upon whether the income or credit side of profit and loss account exceeds the expense or debit side of profit and loss account or vice. Sources of fund: • Funds from operations or Trading profits: Basically there are two methods of calculating funds from operation: To prepare the Profit and loss account afresh by taking into consideration only fund and operation items which involve funds and are related to the normal operations of the business. BISWA financial management –A case study . That is with the closing balance of P & L a/c or retained earning addition of all the non fund and non.operating items which have been credited to P & L a/c.
issue of shares is a source of funds as it constitutes an inflow of funds. it means capital has been raised during the year . • • • Sales of fixed assets and long term investments Non trading receipts Decrease in working capital BISWA financial management –A case study .• Issue of share capital : If during the year there is any increase in share capital. whether preference or equity . • Issue of debentures and raising of loans: Issue of debentures or raising of loans whether secured or unsecured results in inflow of funds into the business.
Application or use of funds: • • • • Funds lost in operations Redemption of preference share capital Repayment of loans or redemption of debentures . etc Purchase of any non-current or fixed asset BISWA financial management –A case study .
funds flow statement. OBJECTIVES OF RATIO ANALYSIS 1. i. It’s also the process of identifying strength and weakness of the organization. It describes the sources of cash and its uses. It summarizes the causes of changes in cash position of a business enterprise between dates of two balance sheets. The annual reports like the Balance sheet and the profit and loss account do not show the financial position of the firm. It is used for the evaluation of the financial position and the performance of the organization or the firm. This statement is very much similar to the statement of changes in working capital. unless and until different relationships are build up among the different items of the annual reports. A cash flow statement focuses attention on cash changes only..e. RATIO ANALYSIS Ratio analysis is one of the most powerful tools of Financial Analysis. The operational efficiency of the firm as a whole. A ratio is a simple arithmetic expression of a relation ship of one figure to the other of the financial reports the interpretation of which will give the financial position and the condition under which the firm or the organization is going through. F.• • Payment of dividends and tax Any other non-trading payment E. CASH FLOW STATEMENT A statement of changes in the financial position of a firm on cash basis is called Cash flow Statement. BISWA financial management –A case study .
Comparison of these ratios with the same firm or the ratios of any other firms of the same industry is done. Calculation of appropriate data is done with this selected data. The comparative study of different years of the same firm. These may include four important steps like: 1. Depending on the objective of analysis the section of data from the annual reports is done.2. LIMITATIONS OF FINANCIAL ANALYSIS The financial analysis is based on the information available in the financial statements. 3. 2. 5. The long term and short-term solvency of the firm for the benefit of the debenture holders and the trade holders. Thus the financial analysis suffers from serious inherent limitations of financial statements. They are: BISWA financial management –A case study . 4. NATURE OF RATIO ANALYSIS Ratio analysis is a technique of analyzing and interpretation of the financial statements to help the financial managers to take important decisions in the organization. 3. 4. Proper interpretation is done. The financial stability of the business concerns. Forecasting and preparing budgets for the future developments.
the analyst has to make interpretation and draw his own conclusions. Financial analysis is based upon only monetary information and nonmonetary factors are ignored. it does not give exact position . Different people may interpret the same analysis in different ways . SUGGESTION: • According to the operation manual that provision for bad debt should be kept 1% for the adequacy.• • It is only a study of interim report. BISWA financial management –A case study . • Analysis is only a means and not an end in itself . But from the income-expenditure sheet it is shown that in each financial year there is an accumulation in the amount of provision for bad debt which may arise question in the mind of bankers before giving long term loan to the organization. Thus accounting concepts and conventions cause a serious limitation to financial analysis. • Biswa micro-finance is borrowing approximately 85% of long term loans from outsiders and is keeping very limited amount as liquid cash which reveals that there is not proper planning that can handle some immediate remedies for natural calamities. • Changes in accounting procedure by a firm may often make financial analysis misleading. • • It does not consider changes in price level As the financial statements are prepared on the basis of a going concern.
Chandra Prasanna. Pandey I. 2009. New Delhi: Vikas publishing house . BISWA is maintaining a high creditworthiness through its corpus fund which helps in arranging loans from banks and others in easy and favourable terms. BIBILIOGRAPHY 1. “Financial Management.mixmarket.biswa. 2. 7/e”.com @: www.com @: www. confidence . and Gupta Neeti. “Financial Management”.org BISWA financial management –A case study . M. • Further the adequacy of working capital creates an environment of security.ninth edition”. Its sufficient loan disbursement enables BISWA in creating and maintaining goodwill. Reference websites: @: www.cgap.It maintain adequacy in working capital which maintaining solvency of the business.2004. 2008. Gupta. • From the analysis it is shown that in the financial year 2005-06 BISWA has not kept any surplus with it but gradually there is an increment in surplus amount which signifies BISWA as a growing organization. “Financial Management.CONCLUSION: • • • • The total figure of BISWA is satisfactory . New Delhi: Kalyani publishers. high moral and creates overall efficiency in BISWA. Tata Mgraw Hill . Sharma. 3. Growth rate of BISWA shows that there is a regular increase in long term investments that is there is a regular increase in loan disbursements which also enables BISWA to increase its credit worthiness.
BISWA financial management –A case study .
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