Machine generated contents note: 1.Capital Regulation and Risk Management Strategy -- Introduction -- Inter-relationship among capital, assets, ROA, and ROE -- Competition for funds -- Rise in losses -- Risk management: A strategic issue -- Concluding remarks -- 2.Liquidity Management and Assets-Liabilities Strategy -- Introduction -- Liquidity management theories -- Fluctuations in the economy -- Liquidity planning -- Liquidity ratios -- Balance sheet approach -- Deployment strategies -- Maturity matching strategy -- Concluding remarks -- 3.Banking Strategy -- Introduction -- Financial sector reforms -- Decline of traditional banking -- Changing savings and investment behaviour -- Liquidity newly defined -- Securitisation -- Strategic planning -- Capital planning -- Growth model -- Banking strategy: The case of ABC Bank -- Strategic planning exercise of ABC Bank -- Cost allocation -- Risk component -- Asset allocation -- Cost of funds -- Operational plan for five years --

Contents note continued: Concluding remarks -- 4.Lending Strategy and Loan Policy -- Introduction -- Need for a loan policy -- Credit-deposit ratio -- The threat of dilution in the quality of loans -- Policy emphasis on non-fund business -- Interest rate policy -- Loan portfolio and exposure policy -- Loan-to-value ratio -- Repayment policy -- Concluding remarks -- 5.Fixed Assets -- Introduction -- Definition -- Land and buildings -- Factory shed location -- Plant and machinery -- Depreciation -- Appreciation -- Capital work-in-progress -- Furniture and fixtures -- Motor vehicles -- Concluding remarks -- 6.Working Capital: A Techno--Financial Approach -- Introduction -- Should we hate current assets? -- Currentness concept and operating cycle theory -- Natural business year -- Negative operating cycle -- Limitations of operating cycle theory -- Mathematical fallacy -- Reversibility test -- An alternative theory of working capital -- Discrete operating inventories --

Contents note continued: Other discrete current assets -- Techno-financial approach -- Core working capital -- Projection of working capital -- Characteristics of Core Working Capital -- Control mechanisms -- Concluding remarks -- 7.Current Assets and Fictitious Assets -- Introduction -- Cash and bank balances -- Sundry debtors/receivables -- Inventory -- Valuation of inventories -- Various types of stocks/inventories -- Loans and advances -- Intangible and fictitious assets -- Fictitious assets -- Concluding remarks -- 8.Long-term Liabilities -- Introduction -- Definition -- Equity or share capital -- Contribution of promoters -- Authorised capital -- Issued and paid-up capital -- Fear of takeover -- Reduction of capital -- Limited liability: Bankers problem -- Preference share capital -- Financing the redemption -- Share premium -- Dividend versus reserves -- Free reserves: The problem -- Bonus shares -- Capital reserve -- Banker's viewpoint -- Debentures -- Term loan --

Contents note continued: Loans from friends and relatives -- Loans from subsidiaries -- Modern financial instruments -- Concluding remarks -- 9.Current Liabilities -- Introduction -- Origination -- Danger of overtrading -- Safety margin -- Trade creditors -- Deposits from customers and public -- Inter-corporate loans and investments -- Bridge loans -- Commercial paper -- Registration of charges -- Concluding remarks -- 10.Profit and Loss Account -- Introduction -- Accounting concepts -- Nature of costs -- Wages -- Production overheads -- Maintenance and repairs -- Administrative costs -- Marketing and distribution costs -- Controllable versus uncontrollable cost Trading, manufacturing, and profit and loss account -- Gross profit -- Operating profit -- PBIT versus PBT -- Trading companies -- Manufacturing companies -- Absorption costing versus direct costing -- Difference in profit measurement -- Cost of goods sold -- Operating profit approach -- Unusual incomes --

Contents note continued: Concluding remarks -- 11.Understanding the Balance Sheet -- Introduction -- Trial balance -- Treatment of closing stock -- Classification of accounts -- Balance sheet -- Net worth -- Gearing of capital -- Shareholders versus banker -- Format of a balance sheet -- Non-corporate borrowers -- Percentage balance sheet -- Preliminary observations -- A business with no formal accounting system -- Concluding remarks -- 12.New Era of Lending: Tandon Committee and Its Aftermath -- Introduction -- I.Tandon Committee -- The norms -- Methods of lending -- System mechanics -- End-use -- Classifications of current assets and current liabilities -- II.Chore Group -- Review of the lending system -- Cash credit system -- Loan system -- Bill system -- Proposed scheme -- Drawee bill system -- Restructuring of financial statements, credit appraisal, and lending decisions -- Lending decision: An example -- Credit appraisal --

Contents note continued: Lending decisions: Problems with the MPBF system -- Concluding remarks -- 13.Business Forecasting and Credit Decisions -- Introduction -- The basic theory -- Variables -- Regression analysis -- Standard error of estimate -- t-Distribution -- Coefficient of correlation -- Illustration -- Checking the assumptions -- Projection of sales -- Projected operating expenses -- Projection of gross working capital -- Projection of trade and expense liabilities -- Bank finance for working capital -- Concluding remarks -- 14.Funds Flow and Cash Flow Analysis -- I.Funds Flow Analysis -- Introduction -- Financing the total operation: Fourth concept -- Sources and uses of funds -- Generation of funds from operations -- Recommendations of IASC -- Acquisition or disposal -- An illustration -- Suggested approach -- Calculation of bank finance for working capital -- II.Cash Flow Analysis -- Clearing the ground -- Value and obligation -- Cash and funds flow --

Contents note continued: Cash book summary -- Detailed cash flow statement -- Cash inflows -- Motives for holding cash -- Cash outflows -- Concluding remarks -- 15.Cost, Profitability, and Break-Even Analysis -- Introduction -- Dilemma of an entrepreneur -- Full cost versus marginal cost -- Variable cost -- Fixed cost -- Semi-variable cost -- Margin of safety -- Profit-volume ratio -- Further problems of Pankaj Verma -- Problem of multiple products -- A simple method for a break-even analysis -- Financial break-even point -- Financial margin of safety -- Limitation and laws of marginal analysis -- Concluding remarks -- 16.Appraisal and Monitoring through Ratios -- Introduction -- Presentation and uses of ratios -- Manipulatory of ratios -- Objectivity in ratio analysis -- Difficulties with ratios -- Classification of ratios -- Efficiency of operational management -- Efficiency of financial management -- Net working capital -- A situation with zero networking capital --

Contents note continued: Implicit credit -- Treatment of contingent liabilities -- Efficiency of debt-service management -- Standards of comparison -- Concluding remarks -- 17.Project Appraisal: Methods and Techniques -- Introduction -- Banks' involvement in project financing -- Policy changes -- Non-financial appraisal -- Technical and managerial viability -- Financial appraisal -- Cost structure -- Depreciation -- Taxation -- Interest -- Discounted cash flow -- Risk element -- Net present value -- Opportunity cost -- Internal rate of return -- Pay back method -- Average and effective rate of return -- Profitability index -- Repayment capacity -- Concluding remarks -- 18.Project Appraisal and Lending Decisions -- Introduction -- Summary of the project -- Financial analysis of the project -- Cost structure -- Life of the project -- Salvage value -- Estimating projected revenue -- Relevant cash flows -- Working capital and term loan -- Cash flow from operations --

Contents note continued: Profitability index and internal rate of return -- NPV versus IRR -- Break-even point -- Debt-service coverage ratio -- Concluding remarks -- 19.Small Business Loan -- Introduction -- The case -- The need of the borrower -- Appraisal -- Alternative scenarios -- Concluding remarks -- 20.Credit Risk Analysis -- Introduction -- Business risk -- Measurement of sales risks -- Coefficient of variation -- Evaluation of sales forecast -- Sales risk index Measurement of operating risks -- Measurement of financial risks -- Measurement of industry risk -- Methodology and results of analyses -- Industry risk category -- Borrower risk -- Character -- Lending decisions based on Cs -- Comprehensive borrower risk analysis -- Determination of final risk category -- Interest rate determination and margin requirement -- Concluding remarks.