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Handout - Session 5 08 Sep 2021 - MSC Fe CB
Handout - Session 5 08 Sep 2021 - MSC Fe CB
GIPE
MSc (FE)
SESSION V
COMMERCIAL BANKING
GUEST FACULTY:SHRIDHAR S 1
COMM. BANKING SESSION V 08-09-2021
• Current & other • Inventory (Raw Mat., WIP, Finished Goods) • Cost of Input goods (M)
Liabilities • Debtors • Cost of input services (M)
(Sundry • Net Fixed Assets • Sales Revenue (M’)
Creditors, Bank • Other Assets • Other Income (M’)
finance) • Net Profit (M’- M) (VA)
• Term Liabilities
• Capital &
Reserves
...(Own Funds + Borrowed Funds (WCL from Bank)): Mn: (Cash Purchases + Credit
Purchases): → (G/S)in → (G/S)on : (Cash Sales + Credit sales) : M(n+1) ……..
IF WE TAKE A FINANCIAL PHOTOGRAPH OF WCC AT ANY POINT OF THE WCC, WE WOULD SEE:
• WCL from Bank, Credit Purchases outstanding (Sundry Creditors for G/S)
• Cash, (G/S)i, (G/S)o, Credit Sales Outstanding (Sundry Debtors for G/S)
GUEST FACULTY:SHRIDHAR S 2
COMM. BANKING SESSION V 08-09-2021
GUEST FACULTY:SHRIDHAR S 3
COMM. BANKING SESSION V 08-09-2021
Purchase ...
Cumulative Purchases … 3,650
(P&L – Expense)
Payment to SCr ...
Cumulative payment to SCr …
SCr Outstanding (Unpaid) … 70
(BS-Liability)
GUEST FACULTY:SHRIDHAR S 4
COMM. BANKING SESSION V 08-09-2021
GUEST FACULTY:SHRIDHAR S 5
COMM. BANKING SESSION V 08-09-2021
GUEST FACULTY:SHRIDHAR S 6
COMM. BANKING SESSION V 08-09-2021
Month 1 2 3 4 5 6 7 8 9 10 11 12 Annu
al
Months Sales 10 10 10 10 10 10 10 10 10 10 10 10 120
Cumulative Sales 10 20 30 40 50 60 70 80 90 100 110 120 120
Month’s Realisation - - 10 10 10 10 10 10 10 10 10 10 100
Cumulative Realisation –SDr - - 10 20 30 40 50 60 70 80 90 100 100
S Dr Outstanding (Unpaid) 10 20 20 20 20 20 20 20 20 20 20 20 20
Month 1 2 3 4 5 6 7 8 9 10 11 12 Annu
al
Months Sales
GUEST FACULTY:SHRIDHAR S 7
COMM. BANKING SESSION V 08-09-2021
Example 1 2 3 4
Example 1 2 3 4
GUEST FACULTY:SHRIDHAR S 8
COMM. BANKING SESSION V 08-09-2021
GUEST FACULTY:SHRIDHAR S 9
COMM. BANKING SESSION V 08-09-2021
1. Cash Flow based : Source of Repayment is Cash Flow from activity financed
Assessment of bank finance involves projecting Cash flows – quantity and timing and stipulating
suitable margins to optimise safety of funds lent
e.g. Term loan by banks, Personal Loans
Assessment involves projecting levels – quantity and value – of assets and stipulating suitable
margins to optimise safety of funds lent.
Usually banks do not go in for such finance for Non Govt. / Non-Bank borrowers
2. WORKING CAPITAL GAP (WCG) = CA – (CL [Other than WCL from Bank])
ASSETS LIABILITIES
A. INVENTORY 700 D. SUNDRY CREDITORS 200
B. SUNDRY DEBTORS 300 E. CURRENT LIABILITIES OTHER THAN WCL FROM BANK (D) 200
F. WORKING CAPITAL GAP (C-E) 800
G. WCL FROM BANK 500
C. CURRENT ASSETS (A+B) 1,000 H. CURRENT LIABILITIES 700
I. NET WORKING CAPITAL (CA-CL) 300
Fixed and Other assets 1,000 Long Term Debt & Capital 1,300
GUEST FACULTY:SHRIDHAR S 10
COMM. BANKING SESSION V 08-09-2021
1. PROJECT SALES AND PURCHASES FOR THE YEAR Y(T+1) – CAPACITY, MARKET CONDITIONS, PRICING
POWER, ETC.
2. PROJECT CREDITORS PERIOD, DEBTORS PERIOD, PROCESS PERIOD, AND STOCK HOLDING PERIOD,
BASED ON MARKET CONDITIONS, TECHNOLOGY USED, ETC.
4 1,000 200 800 M2: 250 300 500 0 300 700 1.43
GUEST FACULTY:SHRIDHAR S 11
COMM. BANKING SESSION V 08-09-2021
shridhar58@gmail.com
9818547778 (WhatsApp)
GUEST FACULTY:SHRIDHAR S 12