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Financial Analysis

AFTERSCHOOOL – DEVELOPING CHANGE


MAKERS
CENTRE FOR SOCIAL ENTREPRENEURSHIP
PGPSE PROGRAMME –
World’ Most Comprehensive programme in social
entrepreneurship & spiritual entrepreneurship
OPEN FOR ALL FREE FOR ALL

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS


Financial Analysis
Dr. T.K. Jain.
AFTERSCHOOOL
Centre for social entrepreneurship
Bikaner
M: 9414430763
tkjainbkn@yahoo.co.in
www.afterschool.tk
www.afterschoool.tk

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS


As an investor, I have 2 options, in
which I get 6000 after 1 year in
another, I get 9000 after 4 years.
Discount rate is 10%. Which option is
better?

 6000 after one year mean 6000/ (1.1)^1


today, thus I have 5454 today.
 9000 after 4 years mean 9000/ (1.1)^4
means 6147, thus second option is
better.

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As an investor, I have 2 options, in
which I get 6000 after 1 year in
another, I get 9000 after 4 years.
Discount rate is 20%. Which option is
better?
 6000 after one year mean 6000/ (1.2)^1
today, thus I have 4999 today.
 9000 after 4 years mean 9000/ (1.2)^4
means 4340, thus 1st option is better.

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As an investor, I have 2 options, in which I
get 6000 after 2 year in another, I get 9000
after 5 years. Discount rate is 18%. Which
option is better?

 6000 after 2 year mean 6000/ (1.18)^2


today, thus I have 4316 today.
 9000 after 5 years mean 9000/ (1.18)^5
means 3933 , thus 1st option is better.

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I will need 100 crores after 5 years
from now. How much money should I
deposit in my bank account every
year? Rate : 10%
 Amt ((1+interest rate)^N – 1) / rate of
interest) = future value of amount.
 Thus Amt ((1.1)^5 -1)/.1 = 100

 Or amt (.61/.1) = 100

 Or amount = 100/6.1

 Or amount = 16.38 approximate every


year.

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My equity capital is 60 lakh, debt is
40 lakh. Beta of my stocks is 1.5,
risk premium in the market = 10%
and treasury bill is at 8%. What is my
cost of capital ?
 Treasury bill (govt. bill) have risk free
interest = so risk free rate of return is 8%.
 Market rate = risk free rate + risk premium
 CAPM = capital asset pricing model
 CAPM fomulae : Risk free rate + Beta *
(Market rate – risk free rate)
 =8 + 1.5* (18-8) =8 + 15 = 23 %.
www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS
Risk free rate = 7.75%, Beta = 2,
Market rate = 16%. Calculate cost of
capital using CAPM?
 CAPM = capital asset pricing model
 CAPM fomulae : Risk free rate + Beta
* (Market rate – risk free rate)
 =7.75 + 2 (16-7.75)

 =24.25 answer.

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Risk free rate = 7.75%, Beta = 2, My
cost of capital = 16%. Calculate
market rate of returns using CAPM?
 CAPM fomulae : Risk free rate + Beta
* (Market rate – risk free rate)
 =16= 7.75 +2 (Market rate – 7.75)

 =16-7.75 = 2M – 15.5

 =8.25 +15.5 = 2M

 M = 11.78 answer.

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If Market rate is 14%, risk free rate
is 8.25% and my cost of capital is
18%. What is my BETA?
 CAPM fomulae cost of capital = : Risk
free rate + Beta * (Market rate – risk
free rate)
18 = 8.25 + Beta (14-8.25)
18-8.25= beta (5.75)
Beta = 9.75 / 5.75 = 1.7 answer.

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You have invested your money in
four sectors. The average returns
are 18, 18, 24 and 16 respectively.
Your beta of these sectors are .9,
1.12, 1.5, .95. which is best sector?
Risk free return = 10 and market
return = 18%
 Expected returns = RF + Beta(RM-RF)
 =10+.9(18-10) = 10+7.2 = 17.2 so on.

 Thus we get expected returns for these


four sectors which are 17.2, 19, 22 and
17.6. Thus third sector has outperformed
in comparison to expectations (24-22 =
2)
www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS
Solution . . . .
 We get 18% in comparison to 17.2 in the
first sector, thus it is very profitable (by
.8)
 In second sector, we get 18% but
expectation is 19%, so it is not upto the
mark. Third sector is the best performing
sector.

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I shall get 100 crore after 5 years
(from afterschooolians), what is the
value of that today? Rate = 10%
= 100 / (1+interest rate)^n
 =100/ (1.1)^5

 =100/1.61

 =62.11 approximate.

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ABO UT A FTERSCH OOO L
Afterschoool conducts three year integrated PGPSE (after
class 12th along with IAS / CA / CS) and 18 month PGPSE
(Post Graduate Programme in Social Entrepreneurship)
along with preparation for CS / CFP / CFA /CMA / FRM. This
course is also available online also. It also conducts
workshops on social entrepreneurship in schools and
colleges all over India – start social entrepreneurship club in
your institution today with the help from afterschoool and help
us in developing society.

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS


Why such a programme?
 To promote people to take up entrepreneurship
and help develop the society
 To enable people to take up franchising and
other such options to start a business / social
development project
 To enable people to take up social
development as their mission
 To enable people to promote spirituality and
positive thinking in the world

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS


Who are our supporters?
 Afterschoolians, our past beneficiaries,
entrepreneurs and social entrepreneurs
are supporting us.
 You can also support us – not
necessarily by money – but by being
promotor of our concept and our ideas.

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS


About AFTERSCHOOOL PGPSE – the best
programme for developing great entrepreneurs

 Most flexible, adaptive but rigorous programme


 Available in distance learning mode
 Case study focused- latest cases
 Industry oriented practical curriculum
 Designed to make you entrepreneurs – not just
an employee
 Option to take up part time job – so earn while
you learn
 The only absolutely free course on internet
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Workshops from
AFTERSCHOOOL
 IIF, Delhi
 CIPS, Jaipur
 ICSI Hyderabad Branch
 Gyan Vihar, Jaipur
 Apex Institute of Management, Jaipur
 Aravali Institute of Management, Jodhpur
 Xavier Institute of Management,
Bhubaneshwar
 Pacific Institute, Udaipur
 Engineering College, Hyderabad

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Flexible Specialisations:
 Spiritualising business and society
 Rural development and transformation
 HRD and Education, Social Development
 NGO and voluntary work
 Investment analysis,microfinance and inclusion
 Retail sector, BPO, KPO
 Accounting & Information system (with CA / CS /CMA)
 Hospital management and Health care
 Hospitality sector and culture and heritage
 Other sectors of high growth, high technology and social
relevance

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Salient features:
 The only programme of its kind (in the whole world)
 No publicity and low profile course
 For those who want to achieve success in life – not just a
degree
 Indepth knowledge and expertise
 Professional approac: World class approach
 Strong intellectual and business capabilities
 Flexible – you may stay for a month and continue the rest of
the education by distance mode. / you may attend weekend
classes
 Scholarships for those from poor economic background
 Latest and constantly changing curriculum – keeping pace
with the time
 Placement for those who are interested
 Admissions open throughout the year
 Latest and most advanced technologies, books and study
www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS
material
Components
 Pedagogy curriculum and approach based on IIM Ahmedabad and ISB
Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad)
 Meditation, spiritualisation, and self development
 Essential softwares for business
 Business plan, Research projects
 Participation in conferences / seminars
 Workshops on leadership, team building etc.
 Written submissions of research projects/articles / papers
 Interview of entrepreneurs, writing biographies of entrepreneurs
 Editing of journals / newsletters
 Consultancy / research projects
 Assignments, communication skill workshops
 Participation in conferences and seminars
 Group discussions, mock interviews, self development diaryng
 Mind Power Training & writing workshop (by Dr. T.K.Jain)

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Pedagogy
 Case analysis,
 Articles from Harvard Business Review
 Quiz, seminars, workshops, games,
 Visits to entrepreneurs and industrial visits
 Presentations, Latest audio-visuals
 Group discussions and group projects
 Periodic self assessment
 Mentoring and counselling
 Study exchange programme (with institutions out of India)
 Rural development / Social welfare projects

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Branches
 AFTERSCHOOOL will shortly open its
branches in important cities in India
including Delhi, Kota, Mumbai, Gurgaon
and other important cities.
Afterschooolians will be responsible for
managing and developing these
branches – and for promoting social
entrepreneurs.

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Case Studies
 We want to write case studies on social
entrepreneurs, first generation
entrepreneurs, ethical entrepreneurs.
Please help us in this process. Help us
to be in touch with entrepreneurs, so that
we may develop entrepreneurs.

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS


Basic values at afterschoool
 Share to learn more
 Interact to develop yourself
 Fear is your worst enemy
 Make mistakes to learn
 Study & discuss in a group
 Criticism is the healthy route to mutual support
and help
 Ask fundamental questions : why, when, how
& where?
 Embrace change – and compete with yourself
only
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www.afterschoool.tk
social entrepreneurship for better
society

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