CAIIB-FINANCIAL MANAGEMENT

1

• CAIIB-FINANCIAL MANAGEMENT
• MODULE-C RATIO ANALYSIS
• RATIO ANALYSIS
• STATEMENT OF SOURCES AND APPLICATION OF FUNDS
• WORKING CAPITAL
• MARGINAL COSTING
• CAPITAL BUDGETING
• CASH BUDGET

2

• FINANCIAL MANAGEMENT
• WORKING CAPITAL
• TYPES OF WORKING CAPITAL
• PERMANENT WORKING CAPITAL
• VARIABLE WORKING CAPITAL
• WORKING CAPITAL CYCLE / OPERATING CYCLE
• MANAGEMENT OF STOCK LEVELS
• MANAGEMENT OF DEBTORS
• MANAGEMENT OF BANK AND CASH BALANCES
• MANAGEMENT OF TRADE CREDIT

3

• FINANCIAL MANAGEMENT
• WORKING CAPITAL MANAGEMENT INVOLVES
• The level of cash needs to be on call at various
  dates.
• The level of inventory do we need to maintain.
• The bank overdraft.
• The period of credit do we grant to our debtors.
• Suppliers payments.
• Proportion of Current assets should be financed
  by short-term funds.
• Level of Working Capital.
• METHODS OF CALCULATION
• Cash Budget Method
• MPBF
• Turnover Method
• Commercial Paper one source of finance for
  Working Capital

4

• FINANCIAL MANAGEMENT
• MARGINAL COSTING
• Concept of costs
• Fixed Cost
• Variable Cost
• Semi Fixed / Variable
• Marginal Cost Variable Cost
• Contribution Sales Marginal Cost
• USES
• More efficient pricing decisions can be made
• Make or Buy Decisions
• Close a department or cost centre
• Accept or Reject an order
• C-V-P Analysis
• B-E-P Analysis
• Margin of Safety

5

• FINANCIAL MANAGEMENT
• CAPITAL BUDGETING
• Capital budgeting involves the entire process of
  planning expenditures whose returns are expected
  to extend beyond one year.
• Non discounting Methods
• Pay Back Method
• Rate of Return Method
• Discounting Methods based on Time Value of Money
• Net Present Value Method
• IRR
• PI

6

• FINANCIAL MANAGEMENT
• CASH BUDGET
• Budgets are similar to standards in several ways
• They are of the future performance of our
  organization.
• They help people within an organization
  plan the future and They enable people to know
  how well they and the rest of the organization
  have performed.
• Budgetary Control
• The comparison of actual results against budget
• The identification, recording and communication
  of controllable differences and
• The taking of corrective action either to
  maintain budget levels or to re-plan to meet
  recent developments.

7

• FINANCIAL MANAGEMENT
• CASH BUDGET
• A Cash Budget is arrived at through a projection
  of future cash receipts and cash disbursements of
  the firm over various intervals of time. It
  reveals the timing and amount of expected cash
  inflows and outflows over the period studied.

8

• FINANCIAL MANAGEMENT
• CASH FLOWS STATEMENTS
• Cash flows statement is basically a summary of
  all the entries that are normally recorded in the
  cash book.
• Funds flow statement means the funds received by
  the company and their how it uses.

9

• FINANCIAL MANAGEMENT
• RATIO ANALYSIS
• The term Ratio refers to the numerical
  or quantitative relationship between two items /
  variables, expressed in a simple mathematical
  form.
• Balance sheet Ratios
• Current Ratio or Working Capital Ratio
• Liquid Ratio or Quick Assets Ratio or Acid Test
  Ratio
• Proprietory Ratio
• Assets Proprietoryship Ratio
• Profit and Loss Account Ratios

10

• FINANCIAL MANAGEMENT
• Profit and Loss Account Ratios
• Gross Profit Ratio
• Operating Ratio
• Expenses Ratio
• Net Profit Ratio
• Stock Turnover or Turnover of Inventory Ratio

11

• FINANCIAL MANAGEMENT
• Balance Sheet and Profit and Loss Account Ratios
• Return on Total Resources Ratio
• Return on Own Funds Ratio
• Fixed Assets Turnover Ratio
• Debtors Turnover Ratio
• Earnings per Share Ratio
• Liquidity Ratios
• Current Ratio
• Net Working Capital
• Acid Test / Quick Ratio

12

• FINANCIAL MANAGEMENT
• Turnover Ratios
• Inventory Turnover Ratio
• Debtors Turnover Ratio and
• Creditors Turnover Ratio
• Leverage / Capital Structure Ratios
• Debt / Equity Ratio
• Coverage Ratios
• Interest Coverage Ratio
• Dividend Coverage Ratio

13

• Thank you very much
• Wish you all the Best