This toolkit offers a practical training in basic financial management and ratio analysis for MFIs. It provides an overview of the key aspects of accounting in microfinance institutions describes the primary financial statements and portfolio reports of MFIs and describes the commonly accepted financial ratios used for monitoring, reporting and measuring MFI performance. Performance ratios cover four general areas of MFI operations: sustainability or profitability, asset and liability management, portfolio quality and productivity and efficiency.
There are several companion resources recommended for this toolkit: “Measuring Performance of Microfinance Institutions: A Framework for Reporting, Analysis, and Monitoring,” developed by the SEEP Network Financial Services Working Group and Alternative Credit Technologies, LLC (2005) (available at www.seepnetwork.org) and “India Microfinance Review 2007” published by Micro-Credit Ratings International Ltd and The Microfinance Exchange (MIX) (available at www.m-cril.com). The M-CRIL and MIX reports provide excellent illustrations and discussions of relevant financial ratio analysis for the Indian context.
For a quick overview, do read through the
toolkit summary.