statistics & business problems 8 oct

www.afterschoool.tk AFTERSCHOOOL MATERIAL FOR PGPSE PARTICIPANTS

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


Financial AnalysisDr. T.K. Jain.

AFTERSCHOOOLCentre for social entrepreneurship

BikanerM: 9414430763

[email protected]

www.afterschoool.tk

http://www.afterschool.tk/

http://www.afterschoool.tk/


We are planning to offer 30 day credit to our customers. We plan to charge interest @24%. If someone makes cash payment, we want to offer cash discount. How much discount should we offer? If I get payment after 30 days, I charge 24%

interest on that. Thus interest charged is 24/100 *30/365 * amount. Thus it will be about Rs. 2 on 100.

Thus cash collection should be 1/(1+interest amount) = 1/1.0197 =.9806

Thus discount = 1-.9806 = .0194 or about Rs. 2 on 100 Rupees.


Our sales are Rs. 25 lakhs. Average collection period is 50 days. Bad debt losses are 5% of sales. Collection exp. 25000. cost of funds = 15%. Choose out of the alternatives:

Option1 : give 40 day credit. Bad debt will be 4% of sales, collection exp. Will be 50000.

Option 2: 30 day credit, bad debt =3%, collection exp. 80000.


Solution . . . OPTION 1. average debtors: 25,00,000*40/365 = 273973, int. =41095 Earlier the debtors were: 2500000*50/365 = 342465, int= 51370 Savings in interest=10275 Bad debt: 4% of 25lakh = 100000 Earlier it was 125000 Savings in bad debts = 25000


Solution . . . Collection exp. = 50000 Earlier it was 25000 Thus there is dis-saving of 25000

Net benefit = 10275+25000-25000 =10275


Solution. . . OPTION 2: Interest on money blocked: 2500000*30/365*15/100 = 30821 Savings in interest =51370-30821 Bad debt = 75000 Savings = 50000 Collection =80000 (loss = 55000) Net impact: 20549+50000-55000 = 15549. Thus option II is far better. Answer.


My annual cash requirements are 10 lakhs. I have 20 FDs of 50000, 1 Lakh, 2 Lakh, 2.5 lakh and 5 lakh each. Conversion charges 1000. Rate of interest 5%. What do I do? If I convert FD of 50000 value, my

conversion charges will be 20000 (I am converting 20 FDs) My interest lost will be (I assume that I

get these matured in between the year, evenly spread out) 2500/2 = 1250 per FD or 25000. total cost 45000.


SOLUTION . . . For 2 lakh. We have 5 conversions, thus cost is

5000. Interest lost : 10000/2 or 5000 per FD

that means loss is 25000. We can find that interest loss is equal in

all cases. But conversion charges are different. Total loss = 30000


Solution . . . Let us try for 5 lakh Conversion charges Rs. 1000 each so

2000. Interest lost (it is a big amount FD, and we

shall not be able to divide it in various months, so interest lost will be at least 75%). Thus 37500.

Total loss: 39500 Thus I should convert Rs. 2 Lakh FD (best).


ABOUT AFTERSCHOOOL 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.


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


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.


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


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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relevance


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 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)


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


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.


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.


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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