Definitions of Selected Financial Terms, Ratios, and ... - CGAP

Microfinance Consensus Guidelines

DEFINITIONS OF SELECTED FINANCIAL TERMS, RATIOS, AND ADJUSTMENTS FOR MICROFINANCE

Microfinance Consensus Guidelines

DEFINITIONS OF SELECTED FINANCIAL TERMS, RATIOS, AND ADJUSTMENTS FOR MICROFINANCE

Published by CGAP/The World Bank Group, September 2003 1818 H Street, NW, Washington, DC 20433 USA

The findings, interpretations, and conclusions expressed in this report are entirely those of the consensus group and CGAP and should not be attributed in any manner to The World Bank, its affiliated organizations, members of their Boards of Directors, or the countries they represent.

This publication was collectively authored by the individuals and organizations listed in the Acknowledgments, all of whom have the right to publish it.

Definitions of Selected Financial Terms, Ratios, and Adjustments for Microfinance First edition: July 2002 Second edition: November 2002 Third edition: September 2003

The current edition of this document (September 2003) can be downloaded from the web sites of CGAP and the SEEP Network:

CGAP SEEP

CONTENTS

ACKNOWLEDGMENTS

iv

INTRODUCTION

1

I. FINANCIAL TERMS

2

Income Statement

2

Balance Sheet

5

Additional Terms

8

II. FINANCIAL RATIOS

10

Calculation Issues

11

Annualizing

Averaging

Ratio Categories

12

Sustainability/Profitability

Assets/Liability Management

Portfolio Quality

Efficiency/Productivity

III. ADJUSTMENTS

18

Subsidy Adjustments

19

Inflation Adjustment

21

Adjustments for Non-performing Loans

22

Foreign Exchange Adjustments

23

TABLE

24

Financial Statement Adjustments and Their Effects 24

REFERENCES

24

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