MBA BANKER

  ·          DER measures the ratio of long term or total debt to shareholder’s equity. ·          The relationship between borrowed funds and the owner’s capital is a measure of the long term financial solvency of the firm. ·          The relationship is shown by the DEBT: EQUITY ratio. ·          The DER is a financial ratio indicating the relative proportion of entity’s equity and debt used to finance an entity’s assets. ·          This is also known as financial leverage . ·          This ratio is used as a standard for judging a company’s financial standing. ·          It is also a measure of a company’s ability to repay its obligations. ·         ...

  The Acid Test ratio is a more stringent measure of Liquidity than the CR (Current Ratio). It is expressed as a ratio of all the current assets excluding inventory to the Current Liabilities. The term quick assets refers to CA which can be converted into cash immediately or at a short notice without decreasing of value. CA included in the category as (i)                 Cash & bank balances (ii)   Short term marketable securities (iii)            Debtors/ receivables CA excluded   Inventory ATR (Acid Test Ratio) is more superior to CR (Current Ratio) The ratio is computed as:- (Cash+ receivables + investments)/ (Current Liabilities) OR (Current Assets –Inventory) / (Current Liabilities –Short Term Bank Borrowings) Receivables are considered to be more easily realisable and so the ratio is supposed to give a better...

  First we need to understand Money comes from owners are termed as Equity and money comes from outsiders are known as Liability . When money comes from outsiders comes with obligations to be repaid within one year or after one year. When it comes with obligation to be repaid within one year is called short term Liability . Taking advance in the form of Cash Credit, Overdraft, and advance from customers, you have the commitment either to repay them or deliver the goods. Using this money, generally one creates Short Term Assets .   If you look at the proportion here, Short term assets are greater than Short term Liabilities. If one business is having Short term assets are greater than Short term liabilities, then the business is in comfortable position. So one can say Liquidity position is comfortable. Let’s have an example, suppose a firm is having Short term assets of 15 Cr and is having Short term liabilities of 10 Cr. This means the company is in comfortable position or ...

After going through Part 1, now let's discuss, whether bank should undertake analysis of financial statement of its credit customers? are ratios useful? Consider the following:- 1) An automobile manufacturer has stocks of cars and other current assets valued at Rs 100 cr and he has payables and other current liabilities worth Rs 80cr. 2) A retailer has stocks in show room and other assets worth Rs 25 lacs and has dues to his creditors and other current liabilities valued at Rs 12.5 lacs. Which Customer is better? Banks analysis will show that in absolute terms the first borrower has lots more money available than the retailer. But when the banker calculates the current ratios, he will find that the automobile seller has CR is (Current Ratio=CA/CL) i.e 100/80= 1.25 and the retailer has 25/12.5= 2. The banker knows that he has to examine the first borrower's financials with reference to industry standards before deciding if the CR is low and is a cause for concern. In te second c...

As a banker first of all we should understand - 1)Various components of balance sheet 2) Classification of Current Asset and Current Liabilities After having understood the above we should develop the skill to analyze the Balance sheet and the Ratios.  When we are having ratios in hand, then we are able to interpret the ratios properly. Having said that above things, we are able to read balance sheet, Profit & Loss statement and Fund Flow statement. Now come to the most important part of our topic-  BALANCESHEET Definition :-It is nothing but a statement of financial position which reveals the money value of company's assets, liabilities and owner's equity (net worth) on a particular day is known as Balance sheet. Horizontal Format B/S Schedule III, of Companies Act 2013 prescribes modified formats for Balance sheet and statement of Profit & Loss as under:- Balance sheet and Banker- A bank calls for the B/S of a company/ firm when it is considering an applic...

 As a Banker, we all busy in achieving targets in liability products, Asset products, Third party products. Ver busy! Exactly, No time at all for us. In the mean time we are not able to empower the customers and sell the wrong product which is not required by the customer. Next time when he will realize that the bank wala sold him wrong product, the relationship will turn into sour. The banker will loose the customer forever. Does the story seem to get connected with you? Yes, it's the story of every banker who does not do any homework and just sell the useless products of the insurance company only to achieve the target without understanding the requirement of the customers, features of the product, capability of the customers. So it becomes very important for the Banker to know what are the Six steps formula He/ She should always practice in his/ her life. when you practice in your life, you will exactly ask your customers to do investment in such financial products. Believe me, ...

 A credit card is a plastic card with specific security and other features that is issued by a bank to its customer to enable the customer to use it as a payment medium. The card also entitles the cardholder to certain credit limits/funds such that a payment can be made even if the customer's account does not have adequate balance.  Thus a credit card is both an instrument of payment and a source of credit . Case study- Suppose one purchases grocery and pays the retailer's bill by means of a credit card. The retailer swipes the card and gives a credit slip which the buyer has to sign. Clearly the buyer has not paid cash to the retailer. In this process, the credit card account with the bank is charged with the amount of grocery purchased.  But how does the retailer get his money? The answer is that the charge that the buyer incurred in buying grocery is ' acquired ' by the retailer's  bank. It will provide the retailer with the amount of transaction made by th...