Internship Report On Financial Statement Analysis Of: Shakti Foundation For Disadvantaged Women
Internship Report On Financial Statement Analysis Of: Shakti Foundation For Disadvantaged Women
Internship Report On Financial Statement Analysis Of: Shakti Foundation For Disadvantaged Women
on
Financial Statement
Analysis
of
Shakti Foundation for Disadvantaged Women
Supervised By
Professor Dr. Md. Abul Hossain
Coordinator, MBA Program
Department of Business Administration
Daffodil International University
Prepared By
Afroza Sultana
ID No.: 163-12-137
Major in Finance
Department of Business Administration
Faculty of Business and Entrepreneurship
Daffodil International University
Date of Submission
November 30, 2019
Internship Report
on
Financial Statement Analysis of Shakti Foundation for Disadvantaged Women
Prepared By
Afroza Sultana
ID No.: 163-12-137
Major in Finance
Program: MBA
Date of Submission
November 30, 2019
Dear Sir,
With humble submission and enormous pleasure my internship report on Financial Statement
Analysis of Shakti Foundation for Disadvantaged Women is presented here before you which
have been prepared under your generous supervision in partial fulfillment of the requirements
for the award of MBA degree (major in Finance). With the best of my devotion, knowledge
and effort it was the priority to prepare this report in such a way that it is in compliance with
the optimal standard and prescribed format.
It has been a great honor and superior opportunity to work under your valuable direction that
persuade me to try my heart and soul together to make this report a successful one.
Sincerely yours,
...............................................
(Afroza Sultana)
ID No.: 163-12-137
Major in Finance
Program: MBA
The Department of Business and Economics
Daffodil International University
This is to certify that, the work entitled “Financial Statement Analysis of “Shakti
Foundation for Disadvantaged Women” is an original work by Afroza Sultana, ID no.-
163-12-137, major in Finance, Department of Business and Economics, Daffodil
International University, Uttara Campus and the internship report is completed under my
supervision and submitted for the partial fulfillment of the requirement for award of Master
of Business Administration (MBA) degree from Daffodil International University, (Uttara
Campus).
.........................................................
(Professor Dr. Md. Abul Hossain)
Coordinator (MBA Program)
Department of Business Administration
Faculty of Business and Entrepreneurship
I do hereby solemnly declare that the work presented in this internship report has been carried
out by me and has not been previously submitted to any other University/College/Organization
for an academic certificate/degree.
I, Afroza Sultana, ID no.163-12-137, declare that the presented internship report on “Financial
Statement Analysis of Shakti Foundation for Disadvantaged Women” submitted as a course
requirement for the award of the degree of Master of Business Administration at Daffodil International
University was prepared me.
The work I have presented does not breach any existing copyright and no portion of this report
is copied from any work done earlier for a degree or otherwise.
I further undertake to indemnify the damage arising from breach of the foregoing obligations.
…………………………..
(Afroza Sultana)
ID no.163-12-137
Major in Finance
Department of Business and Economics,
Daffodil International University
At the beginning I am very much grateful to almighty for giving me strength and opportunity
and sound mind to complete the internship report. I am grateful to many individuals for
completing my internship report successfully.
First of all, I would like to thank to my Internship Supervisor, Dr. Md. Abul Hossain,
Professor for guiding me and encouraging me to work on this exciting topic for my internship
report. I strongly believe that, these will assist me a lot to make me more professional and
building my future professional career.
Finally, my heartiest thanks go to others who were involved and helped directly and indirectly
to prepare this report. Without them all these would not have been made possible.
Shakti Foundation for Disadvantaged Women hereafter named as Shakti Foundation is one of
the top most micro finance institution in Bangladesh. It has 416 branches all over Bangladesh.
It is registered with the NGO Affairs Bureau Bangladesh under The Foreign Donations
Regulations rules 1978 and the Register of Joint Stock Company Ltd. under the Society Act
1860. Shakti Foundation has also received certifications through the Microcredit Regulatory
Authority Act in 2007 to run their microcredit programs.
This report has been prepared based on the internship program that I have successfully completed in
Shakti Foundation under Finance Department in partial fulfillment for the degree of Masters of Business
Administration (MBA) in Daffodil International University. The main objective of this report is to
perform analysis of financial statement of the aforesaid organization. This report has been designed in
such way to give the reader a systemic view of Shakti Foundation’s financial performance along
with its opportunities and threats, strengths and weaknesses. The report has been designed in a
chapter by chapter approach where chapter one is the introductory chapter and contains
introduction, objectives, significance, scope, methodology and limitations of the study. Chapter
two gives an overall view of the historical background, products and services, competitor
analysis and analysis of Vision and Mission statement of Shakti Foundation. Chapter three
illustrates the external factors which lead to opportunities and threats and their score in External
Factors Evaluation (EFE) matrix and the internal factors in terms of existing functional areas of
Shakti Foundation and associated strengths and weaknesses with their score in Internal Factors
Evaluation (IFE) matrix. This chapter also includes SWOT analysis which matches the external
and internal factors and formulate multiple strategies. Chapter four consists of theoretical aspects
like financial performance analysis, statement of financial position, statement of financial
performance and ratio analysis as well. Chapter five will be constructed through the financial
statement analysis of Shakti Foundation. The final chapter finishes with the sequential
presentation of findings of the analysis, recommendations and conclusions.
The report is prepared based on the observation and knowledge achieved during the internship
period in Shakti Foundation. The report will focus on the financial statement analysis giving an
overall view of the financial position and financial performance of Shakti Foundation. As such
the information in this report will be limited to the perspective of Shakti Foundation. This report
may generate ideas for those who exclusively wants to know the financial performance of Shakti
Foundation.
Several Types of research methods are used in studies depending on the field or research. As this
research is on financial statement analysis, certain methods were followed to fulfill the objectives
of the study, making the maximum utilization of the scopes and to avoid the limitations as much
as possible to prepare the final outcome of the study. There are four types of research methods
were used to complete this study. These methods are-
i. Qualitative Method
Qualitative method is concerned with the quality or kind and describing meaning. In this
study I have used qualitative research method to provide a clear concept about my
research topic and to maintain the standards of my research I have analyzed the financial
statements from different viewpoint.
ii. Quantitative Method
Quantitative research is based on the quantitative measurements of some characters. It is
applicable to phenomena that can be expressed in terms of quantities. I have used the
quantitative approaches in this study for some statistical content analysis and to
determine the significance of findings.
iii. Analytical Method
In analytical research, the researcher has to use facts or information those already
available, and analyze these to make a critical evaluation of the material. In this study, I
have used analytical method for ratio analysis and to evaluate the Financial Performance
of Shakti Foundation for Disadvantaged Women.
© Daffodil International University 3
iv. Descriptive Method
Descriptive Research includes surveys and fact finding enquiries of different kinds. The
major purpose of descriptive research is description of state of affairs as it exists at
present. In this report, I have used the descriptive approach to explain the financial
statements, graphs, ratios, financial trend, financial performance and current financial
condition of Shakti Foundation for Disadvantaged Women.
Data have been collected from two sources such as primary sources of data and secondary
sources of data. Primary sources of data are those sources from which the researcher collects the
data directly from the field work and secondary sources of data are those sources which provide
data that are already collected by another researcher. From this point of view, I also have
collected data from both primary sources and secondary sources.
1.Unavailability of Data
Lack of availability of data such as branch data is maintained only in branches.
2. Lack of co-ordination among departments
Improper combination among various departments made data collection complex and time
consuming.
3. Limited time access to Data
Time limitation that would mostly with stands a comprehensive study on the topic selected.
4. Legal Bindings
Due to some legal obligation and strategic secrecy the MFI was reluctant to provide some
sensitive data. Thus, this study limits only on the available published data and certain degree of
formal and informal interview and limited survey.
5. Extensive nature of the Study
Although the particular study is extensive in nature, hard effort was given to make the
study worthwhile and meaningful even then there exists some limitation.
6.Time limitation for internship period
The time limit for this report was three months so within this short span of time it is very
difficult to be familiar with all the activities of the organization
7.Lack of supervision and direct assistance from organization’s officers
As the officers were busy with their daily working activities, they were not able to give
me much time apart from their daily working activities.
8.Corporate and strategic restrictions on disclosure of some information
There were various types of information that the organization’s officers cannot disclose
due to the security and other corporate obligations.
Shakti Foundation is registered with the NGO Affairs Bureau Bangladesh under The Foreign
Donations Regulations rules 1978 and the Register of Joint Stock Company Ltd. under the
Society Act 1860. Shakti Foundation has also received certifications through the Microcredit
Regulatory Authority Act in 2007 to run their microcredit programs.
Shakti Foundation was established in 1992 by Humaira Islam, PhD and a group of social
innovators committed to the socio-economic empowerment of disadvantaged women through
their social and financial inclusion. Its first head office was at Dhanmondi in Dhaka with very
few branches. Shakti initially established a pilot microfinance program to provide small loans
for income generation to women living in Dhaka slums. The program’s success led to similar
microfinance programs in other slums of other cities, the program subsequently expanded to the
rural areas.
Shakti shifted to its newly constructed permanent premises at Mirpur 11 in the year of 2018.
With more than four hundred branches Shakti has now become one of the dominant micro
finance institution in Bangladesh. Currently Shakti covers both rural and urban areas through
its programs in Microfinance, Agro, Health, and Shouro Alo, with branches all across
Bangladesh in 53 districts providing services to 520,834 members.
Micro Finance
As Shakti Foundation’s largest initiative, its Microfinance Program is aimed at ultra-poor urban
women within Bangladesh. This program envisions a society where women learn to trust and
apply their potential effectively without being constrained by societal limitations.
Since its inception in 1992, the Microfinance program now supporting almost 500,000 women.
Its clients have received both monetary, management and moral support to become entrepreneurs
and skilled workers.
© Daffodil International University 7
Members are recognized as legal beneficiaries of our organization. They are trained and
equipped with necessary and relevant skills, from learning how to sign their own name to
opening a savings account. They are also comprehensively educated on all aspects of managing
a loan.
Micro Loan
Micro Loan schemes are the primary financial support to our members. All members of Shakti
Foundation are eligible for this loan, provided they meet the membership criteria and utilize their
loans for income generating activities. A range is allocated for the scheme, with repayments
made on a weekly basis.
The micro enterprise loan scheme was introduced after many previous borrowers showed
promise as entrepreneurs. To be eligible for this loan, the member has to be at least a second
cycle borrower, have a good standing in the group and the center, as well as have a good
repayment history. The procedure is similar to that of the micro loan scheme, except the
repayments can be made on a weekly or a monthly basis.
Savings Scheme
Savings is an integral part of the microfinance program, which offers its members a number of
savings plans. Members make weekly or monthly deposits with Shakti to create a resource base
for members to avail in the future.
My Savings is mandatory for all borrowers of Shakti, in order to educate them on the importance
of responsibly saving income and ensuring security for the future. My Savings entitles members
to save a fixed amount per week with no facilities for withdrawal.
Member DPS is a voluntary scheme for Micro Loan members who can save fixed amounts on a
monthly basis and withdraw the loan after maturity. For ME loans the scheme is mandatory.
Both schemes allow withdrawal with interest if the member decides to leave the organization.
Loan Waiver
Shakti Foundation also grants loan waivers upon the death of a member for her outstanding loan
amount and the registered nominee receives her deposited savings.
Shakti Agro Program is supporting agricultural growth for poverty reduction. Shakti Agro
Program started in 2009 to help disadvantaged members working in the agricultural sector.
The program supports marginal and semi-marginal farmers in their farming and agricultural
practices. It focuses on educating farmers on use of fertilizers, proper cultivation of crops,
modern agricultural equipment and technology for productive output. It also provides agro loans
with service charge that are affordable to farmers. The Agro loans take into account the farmer’s
land and production cost to set the loan ceiling. Shakti also facilitates appropriate market
connections to ensure members receive fair prices for their products and mitigates exploitation.
The Agro program targets rural areas as well as semi-urban areas. In 2017 several innovative
steps were taken that brought new life into the sector. The program has expanded and new
branches have opened. Agro program now covers 11 areas with its 64 branches and has 35,070
members.
Shakti Health Program is providing quality health services at minimal costs to those who live
below the poverty line. Established to serve Shakti members, their families and the
underprivileged communities as a whole, this program has been designed to provide medical
© Daffodil International University 9
services, health related loans and grants, whilst simultaneously raising awareness regarding
health issues. Shakti Foundation launched the Health Program in 1997 and is available to
everyone, irrespective of age, gender and involvement with Shakti. The program provides
healthcare services within 37 districts.
Primary care is provided at health centers that are staffed with qualified doctors and paramedics.
They provide primary treatment, doctor’s referrals, and discounts at certain hospitals. Shakti
clients can purchase a health card to avail the services, including consultations with doctors or
paramedics, monitoring of blood sugar and pressure, diabetes testing, pregnancy tests, and
Hepatitis B screenings. These centers have their own pharmacies.
This service was introduced to raise awareness of the management of blood pressure and
diabetes, and is provide at health service centers. The centers are run by female, non-medical
personnel who have at least passed the SSC or above. Clients can purchase a health card to avail
the services of a health service centre.
The program strives to ensure basic quality health services through following activities- Primary
health care
Doctor’s referral
Antenatal & postnatal care
Expanded immunization & family planning
Health awareness
Health loans & grants for members
Medical camp & Eye camp
Health related workshops
National & International Day Celebration with Government
Shakti is a direct participant of the government immunization program. This program is designed
for children under the age of 5 and is registered under EPI (Expanded Program on
Immunization).
Family Planning
Shakti members are educated on the importance of family planning and provided free
medications such as birth control pills. Shakti is registered with the Family Planning Directorate
and also contributes to the government family planning program.
Health Loan
This loan is designed to meet any expenses related to emergency treatment of our members and
their families. It can be anything from a minor fracture to major surgery that needs to be attended
to immediately. This is an interest-free loan.
Health Grant
Members and their children under the age of 12 are eligible for these grants. It is given for
complicated health situations when members are unable to cover the medical expenses. These
do not need to be repaid
Mission Statement
Shakti Foundation’s mission is to eradicate poverty and stabilize social security for
underprivileged women across the country. Shakti Foundation strongly believes in women’s
potential to become decision makers, leaders, and agents of change in their communities.
To become the leading micro finance institution covering the maximum members in the under
privileged women group all over Bangladesh through providing economical, health and practical
training based support to them.
Shakti Foundation strives to make the under privileged women (1) of the country (3) the
economic leader and decision maker in the society through providing micro finance (2) and
health finance (2) to them along with the opportunities of flexible savings schemes (2) to meet
up their future economic necessity and making them financially strong. Along with Shakti also
has its outmost effort to make it convenient for its member using modern technology (4) like
online Micro Finance Information System (MFIS), payment through electronic wire transfer like
Rocket (DBBL), Bank Asia Agent Banking etc. Shakti works with a view to spread all over
Bangladesh (5) covering as much under privileged women as possible within shortest possible
time. Shakti believes that women can be the pioneer (6) for a developed Bangladesh. The
dynamic range of Micro Finance and a dedicated, well trained human resource (9) (7) make
Shakti Foundation enable to implement its objective successfully becoming the assistant in the
growth of economically backward women (8).
3.1 Introduction
The Industrial Organization (IO) view prioritize the external factors of an organization than the
internal factors. External factors cannot be controlled and can significantly influence an
organization strategic activities. External factors can be identified through PESTEL (Political,
Economic, Social, Technological, Environmental and Legal) analysis.
External factors of Shakti Foundation are identified through PESTEL analysis in the following-
Political Factors
Political factor is very important for Shakti Foundation as it works through all over Bangladesh.
There are restrictions on areas where it cannot continue its operation. Also the government has
fixed the interest rate ceiling at which micro finance has to be provided. Though the government
is taking initiatives to encourage micro finance program.
Economic Factors
There has been a continuous inflation for which micro finance is not adequate as financing. As
such people are becoming less interested in micro finance. Shakti Foundation provides finance
on easy terms and conditions and without major security which make people interested to take
micro finance.
Social Factors
In our society in many cases women are restricted to come outside for economic purpose. Along
with they cannot join the Shamity to take the micro finance. Now a day the thinking and attitude
is changing to a great extent.
© Daffodil International University 14
Technological Factors
Technology has become very important for Micro Finance institution. There have been lots of
new system introduced for receipt and payment of cash. Also keeping the track of member is
crucial and as such efficient information technology system is important.
Legal Factors
Legal factors include the misappropriation of the finance provided. Also the finance may be used
for money laundering or terrorist activities.
Environmental Factors
Environmental factors include the stability and protection of the environment. All the institutions
are trying to reduce their paper use and power consumption to save the environment
A list of key opportunities and threats based on PESTEL analysis of Shakti Foundation is given
in the following-
Key Opportunities
Key Threats
Introduction
Internal Factor Evaluation (IFE) Matrix is a strategy-formulation tool which summarizes and
evaluates the major strengths and weaknesses in the functional areas of a business, and it also
provides a basis for identifying and evaluating relationships among those areas. Intuitive
judgments are required in developing an IFE Matrix, so the appearance of a scientific approach
should not be interpreted to mean this is an all-powerful technique. A thorough understanding
of the factors included is more important than the actual numbers. The Resource Based view
prioritize the internal factors of an organization than the external factors. Internal factors can be
controlled and can significantly influence an organization strategic activities and performance.
Internal factors can be identified through different strategic departments of an organization such
as Finance, Human Resource, Accounts, Procurement, Internal Control and Compliance,
Programme, Marketing and so on.
Key Strengths
(a) Strong Finance Team
(b) Use of modern technology
(c) Large number of branches
(d) Own training centres
(e) Strong human resource department
Key Weaknesses
(a) Poor communication skill of field employees
(b) Centralized management
(c) Weak monitoring team
(d) Weak logistic structure
An IFE Matrix is constructed in the following bases on the identified strengths and weaknesses
of Shakti Foundation-
Strengths
Weaknesses
1 2.70
Among the four types of generated strategies, SO strategies use a firm’s internal strengths to
take advantage of external opportunities. All managers would like their organization to be in a
position in which internal strengths can be used to take advantage of external trends and events.
Organizations generally will pursue WO, ST, or WT strategies to get into a situation in which
they can apply SO strategies. When a firm has major weaknesses, it will strive to overcome them
and make them strengths. When an organization faces major threats, it will seek to avoid them
to concentrate on opportunities.
ST strategies use a firm’s strengths to avoid or reduce the impact of external threats. This does
not mean that a strong organization should always meet threats in the external environment head-
on. An example ST strategy occurred when Texas Instruments used an excellent legal
department (a strength) to collect nearly $700 million in damages and royalties from nine
Japanese and Korean firms that infringed on patents for semiconductor memory chips (threat).
Rival firms that copy ideas, innovations, and patented products are a major threat in many
industries. This is still a major problem for U.S. firms selling products in China.
WT strategies are defensive tactics directed at reducing internal weakness and avoiding external
threats. An organization faced with numerous external threats and internal weaknesses may
indeed be in a precarious position. In fact, such a firm may have to fight for its survival, merge,
retrench, declare bankruptcy, or choose liquidation.
Strengths(S) Weaknesses(W)
It is important to note that assets are owned only for the income they can produce for the firm. Liabilities
and owners’ equity provide the funds for the purchase of these assets.
1. Assets generate income (the left-hand side)
The left-hand side of the balance sheet lists the firm’s assets. The only reason for a firm to hold an asset
is if it produces income. The assets of the firm produce the firm’s income. There is no reason for a firm
to hold an asset if it is not going to produce income.
2. Financing the assets (the right-hand side)
For every dollar in assets the firm has, there will either be a dollar of liability or a dollar of equity on the
right-hand side of the balance sheet. The right-hand side of the balance sheet shows how the firm is
financing its assets. By adjusting the mix of debt and equity, the lowest cost of financing can be achieved.
In summary, the left-hand side of the balance sheet reports the assets that earn income and the right-hand
side reports how these assets are financed.
Financial statement analysis is not an exhaustive list by any standard. There are many ratios that can be
used. In fact, it is common for analysts to create specialized ratios to look at a factor peculiar to a firm or
industry. For example, revenues and costs per kilometer flown are often computed for airlines. The
formulas presented here for each ratio may differ from those reported elsewhere. An effort has been made
within this section to locate the most common definition for each formula, but for some there is simply
no consensus among reporting agencies. This means that, when comparison is made among ratios
computed by different sources, it must be ensured that they are all computed in the same way.
This analysis expresses each item in a financial statement as a percent of a base amount. Financial
statement elements are measured as a percent of the total.
Balance Sheet Income Statement
Elements are a percent of total sales
Elements are a percent of total assets
(service charges received)
This analysis shows ratios in percentages (for example current assets / total assets, long-term assets / total
assets). Vertical analysis compares each item with a base item. In an income statement analysis net
operating income is the base item. In a common-size balance sheet analysis total assets are the base item.
In a statement of cash flow analysis net cash flows from investing activities should be a base item as
usually net cash outflows from investing activities are financed with positive net cash flows from
operating activities and positive net cash flows from financing activities.
Return on capital indicates MFIs ability to build equity through retained earnings, and increased
equity enables the MFI to leverage more financing to grow its portfolio. By excluding donations
and non-operating revenues, this ratio demonstrates an institution’s ability to generate income
from its core financial service activity.
Return on capital can be temporarily depressed due to unplanned events (such as natural
disasters) or planned undertakings (such as expansion). Monthly measurements of Return on
capital can be misleading because many MFI costs may not be recorded until the end of the fiscal
year. Managers should look for a positive trend over several years and a ratio similar or better
than competitors. As the market becomes saturated and competition increases, return on capital
may plateau. Return on capital is a financial and accounting KPI which is commonly used by
senior operations mangers to gauge the rate of return a business is generating on the book value
of the capital the company's owners or shareholders currently have invested in the business. The
Return on Capital measure is also used by businesses as a threshold to select and execute capital
expenditure projects that may present themselves from time to time, especially when adding new
© Daffodil International University 26
production capacity. The formula is the following-
5.1 Introduction
Shakti Foundation has a sound financial management which ensures timely and accurate
production of financial reports from punctual and accurate financial records. This begins with
accounting: the process of recording financial transactions, grouping them together by category,
and summarizing them for a certain period or at a certain point in time. The summarized
information of all these transactions is placed in standardized financial statements.
Shakti Foundation produces financial statements based on a format required by lenders, donors,
local regulators, or network organizations. The Financial statement analysis helps the
management of Shakti Foundation to evaluate the achievement of projected result, to plan and
to make decisions to strengthen its operations. Financial ratio analysis – as presented and
discussed in this report will assist the reader to evaluate, explore and measure Shakti
Foundations’ overall performance. Ratios are relationships between numbers. They are
comparative figures. Comparisons are made over a period of time which mark the “trends” or
the path of progress of Shakti Foundation. None in itself is complete but when several are used
together, they provide a concise, useful, and quantifiable description of the financial situation of
Shakti Foundation. If correctly utilized, they can provide the basic information upon which one
can measure the financial “health” of this Micro-Finance institution.
In the process of preparation of this report several Financial Statements of Shakti Foundation are
collected containing all the components. These components were Balance Sheet, Income and
Expenditure Statement, Statement of Cash Flows and Notes to the Financial Statements. These
statements were prepared with the objective to meet the user requirements as such some these
statements were not in the format required for ratio analysis. To make them fulfil the objective
of ratio analysis of this report some of the statements were reconstructed based on the required
format for ratio analysis. Those were renovated with a view to supporting the necessity of over
several periods analysis. In this process no arbitrary value was used, rather the real financial
information was extracted from the notes to the Financial Statements.
PKSF Funded:
Jagoron 350,426,879 267,059,894 31%
Agrosor 45,433,505 39,814,717 14%
Buniad 1,248,833 3,539 35188%
Sufolon 44,733,201 28,926,452 55%
Non PKSF Funded 1,145,293,332 873,159,194 31%
Total Service Charge Income (A) 1,587,135,750 1,208,963,796 31%
B.Other Income
Interest on FDR 30,366,004 23,921,025 27%
Bank Interest 3,431,778 2,739,656 25%
Sale of forms/Processing Fee 19,861,854 20,540,485 -3%
Membership fees 7,500 7,500 0%
Miscellaneous Income 1,026,502 1,659,058 -38%
Total Other Income (B) 54,693,638 48,867,724 12%
Interpretation
From the above analysis it is clear that Shakti Foundation’s operating income has increased from
previous year. This increase is more in comparison to the increase in operating expense. It
indicates that Shakti Foundation is performing well with its overall efficient management.
Interpretation
From above analysis it is shown that non-current asset of Shakti Foundation has increased
significantly which may not be favorable for the organization. Steps should be taken by the
management to make clear judgement whether organization’s net working capital should
be increased rather than investing in non-current asset to generate more value for the
organization.
PKSF Funded:
Jagoron 350,426,879 100%
Agrosor 45,433,505 100%
Buniad 1,248,833 100%
Sufolon 44,733,201 100%
Non PKSF Funded 1,145,293,332 100%
Total Service Charge Income (A) 1,587,135,750 100%
B.Other Income
Interest on FDR 30,366,004 1.91%
Bank Interest 3,431,778 0.22%
Sale of forms/Processing Fee 19,861,854 1.25%
Membership fees 7,500 0.00%
Miscellaneous Income 1,026,502 0.06%
Total Other Income (B) 54,693,638 3.45%
Total (A+B) 1,641,829,388 103.4%
Interpretation
From the above analysis it is observed that salary and allowances are almost 40% of total
service charge income which is very high. The management of Shakti Foundation should
consider this carefully and build up efficient human resource to lower the administrative
cost.
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6.1 Findings
Ratio analysis expresses the relationship among selected items of financial statement data.
A single ratio by itself is not very meaningful. Ratios also allow for better comparison
through time or between companies. Ratio analysis is a financial management tool that
enables managers of microfinance institutions to assess their progress in achieving
sustainability. They can help answer two primary questions that every institution involved
in microfinance needs to ask:
a. Whether this institution is either achieving or progressing towards
profitability and
b. Its efficiency in achieving its given objectives.
Only one ratio cannot satisfy all analysis requirements. There are no values for any specific
ratio that are necessarily correct. It is the trend in these ratios that is critically important.
Ratios must be analyzed together, and ratios tell you more when consistently tracked over a
period of time. Frequent measurement can help identify problems that need to be solved
before they fundamentally threaten the MFI, thus enabling correction. Trend analysis also
helps moderate the influence of seasonality or exceptional factors. The findings of this study
is described sequentially in the following-
Horizontal analysis shows that Shakti Foundation’s operating income has increased more in
comparison to the increase in operating expense. It indicates that Shakti Foundation is
performing well with its overall efficient management. Noncurrent asset of Shakti
Foundation has increased significantly which may not be favorable for the organization if
the increase is not new investment regarding expansion.
Vertical analysis put light on the fact that salary and allowances are almost 40% of total
service charge income which is a substantial portion of total expense. From the analysis it
is understood that Shakti Foundation has high debt to asset ratio which may be a threat to
its solvency. Also the net working capital ratio is not decent and it is only 13% of the total
The analysis shows us that cumulative recovery rate of Shakti Foundation has been 99.56%,
99.39%, 99.31%, 99.29%, and 99.28% for the last five years which indicates very good
performance. Though it does not show the actual year to year scenario.
The graphical representation shows that recovery of loan has been on time for the last five
years 97.03%, 98.62%, 97.59%, 98.75% and 98.40% and the rate is more than 95% which
is pretty better than the industry standard. From here we can see every individual year
performance of Shakti Foundation was good to recover loan on time. But the sudden fall in
the percentage in recent year is a matter of great concern and needs special attention to give.
Shakti Foundation’s Portfolio At Risk (PAR) is above 5% every year which is not a positive
indication. For the last five years it was 6.07%, 6.62%, 8.16%, 9.54% and 9.82%
respectively. Though it can be justified that total portfolio has also increase, but every year
the risk of default borrower is a great amount. It may possess a great threat of loss to the
organization. Necessary steps needed to be taken to keep PAR as low as possible.
Shakti Foundation rate of return on capital has been increased significantly over the past
few years. For the last five years it was 23.40%, 17.70%, 7.42%, 9.38% and 6.50%. It also
implies that the ability of the organization to build equity from retained earnings is
increasing.
Shakti Foundation debt has been increased except last year where it reduces than previous
year. It seems that Shakti is not performing that well to finance its own net working capital
requirements. The scenario of last five years is 5.52:1,6.14:1, 3.67:1, 3.99:1 and 4.12:1.
The Capital Adequacy Ratio (CAR) of Shakti Foundation has continually decreased which
indicates that capital of Shakti Foundation has decreased in proportion to risk weighted
asset. Last five years it was 14.94%, 17.07%,16.78%, 18.96% and 18.32%.
The current ratio for Shakti Foundation is continuously decreasing. Which means that the
organization may face short term solvency problem to meet its current obligation. The figure
for last five years was 1.69:1, 1.71:1, 1.78:1, 1.87:1 and 1.89:1. Shakti Foundation has less
than 2 Taka asset for every 1 Taka of debt which very lower than the standard.
The organization has continuously less amount of investment against the member deposits
which possess a threat to the security of the member deposit. For the last five years the
scenario is 2.94%, 2.63%, 9.73%, 10.34% and 10.43%. Shakti Foundation has been
constantly in finance crisis. Moreover, the organization may face non-compliance as per
requirements of regulatory authority to keep minimum liquidity to savings ratio.
Yield on Portfolio is 24.31%, 22.97%,26.24%,14.02% and 11.71% for the last five
years. It has increased significantly in recent years which indicates earning performance of
Shakti Foundations has been improved. Though this indictor relies on the rate of interest
charge on the borrower so may not be actually comparable if interest rate has been changed.
Shakti Foundation is managing its asset efficiently to optimize its profitability. This has been
improved over the periods but the improvement rate is very slow. For the last five years the
ratio is 3.01%, 2.26%, 1.66%, 2.15% and 1.07%. Shakti Foundation is required to develop
its overall performance to increase its return on total asset.
2.. The management of Shakti Foundation should build up efficient human resource to lower
the administrative cost which is substantial amount of total cost.
3. Though cumulative recovery rate shows good percentage it must be verified with actual
collection at the field.
4. The PAR of the organization is high every year. Necessary steps needed to be taken to
keep PAR as low as possible.
5. Shakti Foundation should try to build up its own capital to reduce finance cost and debt
to equity ratio. It will increase profitability.
6. Now a days MFIs are operating in a more volatile and riskier environment so Shakti
Foundation should have a higher Capital Adequacy Ratio (CAR) to absorb losses as the
Portfolio at risk is also at risk.
7. Shakti Foundation has less than 2 Taka asset for every 1 Taka of debt which very lower
than the standard. This can create serious problem to meet up current obligations. Shakti
Foundation has to increase its liquidity with respect to its current liability.
8. To avoid regulatory non-compliance and to ensure the security of member deposit Shakti
Foundation has to increase its investment against member savings up to the required ratio
as per the regulatory guideline.
9. Shakti Foundation is required to develop its overall performance to increase its return on
total asset.
10. Sudden drop in on time recovery percentage is a matter of great concern. Monitoring has
to be made strong along with the improvement of efficiency of field management to address
this issue and take necessary measurements.
(a) Books:
(c) Websites:
https://www.shakti.org.bd
https://learnmicrofinance.com/
39 %
SIMILARITY INDEX
39%
INTERNET SOURCES
5%
PUBLICATIONS
%
STUDENT PAPERS
PRIMARY SOURCES
1
www.shakti.org.bd
Internet Source 8%
2
www.pearsoncanada.ca
Internet Source 4%
3
learnmicrofinance.com
Internet Source 4%
4
www.slideshare.net
Internet Source 3%
5
chris264.wordpress.com
Internet Source 3%
6
dspace.bracu.ac.bd:8080
Internet Source 2%
7
www.sfdw.org
Internet Source 1%
8
www.safaribooksonline.com
Internet Source 1%
9
www.cgap.org
Internet Source 1%
10
dspace.daffodilvarsity.edu.bd:8080
Internet Source 1%
11
documents.mx
Internet Source 1%
12
www.leanmanufacture.net
Internet Source 1%
13
www.authorstream.com
Internet Source 1%
14
shodhganga.inflibnet.ac.in:8080
Internet Source 1%
15
docplayer.net
Internet Source 1%
16
www.mbaknol.com
Internet Source 1%
17
www.seepnetwork.org
Internet Source <1%
18
opportunity.org
Internet Source <1%
19
www.ijirmf.com
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20
epdf.pub
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21
seepstage.forumone.com
Internet Source <1%
22
www.khushhalibank.com.pk
Internet Source <1%
23
mpra.ub.uni-muenchen.de
Internet Source <1%
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www.microsave.net
Internet Source <1%
25
eduprojecttopics.com
Internet Source <1%
26
pt.slideshare.net
Internet Source <1%
27
www.businessdictionary.com
Internet Source <1%
28
onlinelibrary.wiley.com
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29
www.amfiu.org.ug
Internet Source <1%
30
www.coursehero.com
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31
onlineaccountreading.blogspot.com
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32
fr.scribd.com
Internet Source <1%
33
www.termpaperwarehouse.com
Internet Source
<1%
34
www.calbrokersghana.com
Internet Source <1%
35
vic.canoe.org.au
Internet Source <1%
36
higheredbcs.wiley.com
Internet Source <1%
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de.slideshare.net
Internet Source <1%
38
www.antiessays.com
Internet Source <1%
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docslide.us
Internet Source <1%
40
issuu.com
Internet Source <1%
41
AICPA. "Investment Companies, 2019", Wiley,
2019
<1%
Publication
42
www.unn.edu.ng
Internet Source <1%
43
repository.up.ac.za
Internet Source <1%
hdl.handle.net
Internet Source
<1%
44
45
tealeaf.ca
Internet Source <1%