This course is designed for students interested in understanding the banking concepts and operations. The target clientele are students considering a career in banks and those interested in acquiring the knowledge and skills necessary for making informed personal investment decisions. This course will be differentiated by its emphasis on both the theoretical and practical considerations.
This presentation is a brief introduction to FCNR account is opened by NRI's and PIO's in foreign currency without any Foreign exchange risk.It is basically a Term Deposit ie.FD
Financial institutions plays a very important role in an economy. There is a positive relationship between financial institution and economic development. Developing countries need to increase the availability of financial institution and financial services to its people.
This presentation is a brief introduction to FCNR account is opened by NRI's and PIO's in foreign currency without any Foreign exchange risk.It is basically a Term Deposit ie.FD
Financial institutions plays a very important role in an economy. There is a positive relationship between financial institution and economic development. Developing countries need to increase the availability of financial institution and financial services to its people.
This presentation is useful to study about bank and banking system. This presentation is also useful to make presentation on Bank and Banking System. This is also useful to study Engineering Economics and Management.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
how can i use my minded pi coins I need some funds.
Banking operations
1. Banking Operations
Sardar Shaker Ibrahim
MSc. Banking and Finance/ university of Leicester/UK
Administrative Technical College
Duhok Polytechnic University
Sardar.shaker@dpu.edu.krd
2. Course overview
o The lectures consists of 6 hours per week.
o Lectures will be used for :
– Going through new theories and concepts.
– Introducing and explaining models.
o Assessment
Coursework (5%): such as seminars, reports and
assignments.
Quiz (5%):
Mid- semester exam (30%).
Final exam (60%).
3. Textbooks
1. Mayer, T., Duesenberry, J. and Aliber, R. (1981). Money,
banking, and the economy. New York: Norton.
2. Fraser, D., Gup, B. and Kolari, J. (2001). Commercial
Banking, the management of risks. 2nd ed. US: South
Western College Publishing.
3. Casu, B., Molyneux, P. and Girardone, C.
(2006). Introduction to banking. London: Prentice Hall
Financial Times.
4. Arondekar, A., Agarwal, O., Nath, O. and Khandelwal, P.(
2005). Principles Of Banking. New Delhi,India: Macmillan
India Ltd.
5. http://www.investopedia.com/
3
4. “A bank is a financial institution or a financial
intermediary that accepts deposits and channels those
deposits into lending activities, either directly or
through capital market. A bank connects customers
with capital deficits to customers with capital
surpluses.”
The nature of the financial
intermediation
Sardar Shaker Ibrahim 4
5. • A surplus unit: is an economic agent whose
current income exceeds current expenditure.
• A deficit unit: is one whose expenditure is
greater than its income.
Sardar Shaker Ibrahim 5
6. • Direct finance: refers to the situation where the
surplus funds are channelled directly from the
surplus unit to the deficit unit. The disadvantage
of this type is the difficulty and expense of
matching the complex needs of individual
borrowers and lenders.
• In direct finance: is the process by which deficit
units obtain funds from a financial intermediary,
which obtains its own funds from surplus units. It
is necessary to point out that financial
intermediaries create additional costs for
borrowers and lenders who use their services.
6
Types of finance
Sardar Shaker Ibrahim
8. • Legitimacy: First and foremost, you want to use a legitimate bank. Sticking with a large,
widely known bank should be a safe bet.
• Location: Most people want to use a bank that has a branch close to where they live
and/or work.
• Size: If you never leave town, there's no reason not to use a small, local bank. However, if
you travel, you should choose a national or international bank so you'll have easy access to
your money when you're out of town.
• Fees: Some banks don't cost any money to use as long as you keep your account balance in
the black, while others nickel and dime their customers with fees at every turn.
• Use: This may be hard to determine if you've never had a checking account before, but
consider what would make banking comfortable and convenient for you. Do you prefer to
talk to someone in person or interact with a machine? Do you want to be able to write lots
of checks or would you rather pay bills online?
• Wealth and Worth: Some bank accounts are designed for customers with large amounts of
cash.
• Deposits: Some bank accounts are designed for people who can have their regular
paycheck directly deposited by their employer.
How To Choose A Bank
Sardar Shaker Ibrahim 8
9. • Security: Storing all your money in cash at home
just isn't safe. Your home could be burglarized,
flood, or catch on fire. Once you have more than
a few hundred dollars to your name, it's really
best to have a secure place to put your money.
• Convenience: When you have money in the
bank, you can access it from anywhere.
• Saving and Investing: Once you have enough
money, you'll want to go beyond a checking
account and start saving and investing your
money to optimize your future financial situation.
Why Use A Bank?
Sardar Shaker Ibrahim 9
10. SAVING BANKS
• Saving Banks are established to create
saving habit among the people.
• These banks are helpful for salaried
people and low income groups.
• The deposits collected from customers are
invested in bonds, securities etc.
Sardar Shaker Ibrahim 10
11. COMMERCIAL BANKS
• Commercial banks are established with an objective to
help businessman.
• These banks collect money from general public.
• It gives short-term loans to businessmen by way of
cash-credits, over drafts etc.
• It provides various services like
• Collecting cheques
• Bill of exchange
• Remittance money from one place to another
place.
Sardar Shaker Ibrahim 11
12. INDUSTRIAL BANKS / DEVELOPMENT
BANKS
• These banks collect cash by issuing shares
and debentures.
• It provides long-term loans to industries.
• The main objective of these banks are to
provide:
1. Long-term loans for expansion
2. Modernization of industries
Sardar Shaker Ibrahim 12
13. LAND DEVELOPMENT BANKS /
AGRICULTURAL BANKS
• An Agricultural Bank (Land Bank) is a credit bank specifically
established to assist agricultural development, particularly by
granting loans for longer periods than is usual with
commercial banks.
• These are formed to finance agricultural
sector.
• It also helps in land development.
Sardar Shaker Ibrahim 13
14. INDIGENOUS BANKS
• It means ‘Money Lenders’.
• They collect deposits from general public
and grant loans to the needy persons out
of their own funds as well as from
deposits.
• These indigenous banks are popular in
villages and small towns.
• It performs combined functions of trading
and banking activities.
Sardar Shaker Ibrahim 14
15. COOPERATIVE BANKS
• Cooperative Banks are registered under
the Cooperative Societies Act, 1912.
• It gives credit facilities to small farmers,
salaried employees, small-scale industries
etc.
• These banks are available in rural as well
as urban areas.
Sardar Shaker Ibrahim 15
16. EXCHANGE BANK
• These banks are mainly concerned with
financing foreign trade.
Sardar Shaker Ibrahim 16
17. Central Bank
• In every country, there is one bank which acts
as the leader of the money market -
supervising, controlling and regulating the
activities of Commercial Banks and other
financial institutions.
• The government established the Rafidayn Bank
in 1941 as both the primary commercial bank
and the central bank and the bank’s head office
is located in Baghdad with four branches
in (Basrah, Mosul, Sulaimaniyah and Erbil).
Sardar Shaker Ibrahim
17
18. Central Bank
It is top institution of monetary
systems
It is owned by government
It is non profit org.
It is banker and agent to
government
It controls credit created by
commercial banks
It has monopoly to note issue
It has no competition
There is only one central bank
in economy
Commercial Bank
It is operating as per guideline of
central bank
It owned by private sector or
government
It is a profit seeking org.
It is banker and agent to public
It creates credit
It has no power to issue credit
There is a competition among
themselves.
Commercial banks are many in
number
Difference between Central and Commercial Bank
Sardar Shaker Ibrahim 18
19. 19
Accounting Identities
Assets
– Loans and overdrafts
– Deposits with other banks
– Items in collection
– Notes and coins
– Treasury bills and other
securities
– Reserves
– Other assets (premises and
equipment)
Liabilities
– Demand deposits
– Savings deposits
– Time deposits
– Borrowings
– Other
Bank capital:
– Shareholder’s capital
– Loan loss reserves
Sardar Shaker Ibrahim
20. • The Balance Sheet is a list of a bank’s assets
and liabilities
Total assets = total liabilities + capital
Example 1:
The Assets of a business are 500,000 and its capital is 115,000.
Its liabilities on that date would be?
Total assets = total liabilities + capital
500,000= total liabilities +115,000
total liabilities= 500,000-115.000
total liabilities= 385,000
Sardar Shaker Ibrahim 20
21. • The following items were taken from the records
of Kurdistan national bank as of December 31st.
Cash 3000, Cash at central bank 17000, Cash at
other banks 12000, Bonds of other companies
3000, deposits with other banks 2700, stocks 500,
loans 42300, other assets 500, Demand deposit
31000, time deposits 24500, saving deposit 18000,
other liabilities 500, Shareholders capital 4500 and
loss loan reserves 1500.
• Prepare a balance sheet in proper format for
Kurdistan national bank as of December 31st
Example 4
Sardar Shaker Ibrahim 21
22. Assets Liabilities and Capital
Cash 3000 Demand deposit 31000
Cash at central
bank
17000 Time deposits 24500
Cash at other
banks
12000 Saving deposit 18000
Bonds of other
companies
3000 Other liabilities 1500
Deposits with
other banks
2700
Stocks 500 Shareholders capital 4500
Loans 42300 Loss loan reserves 1500
Other assets 500
Total assets 81000 Total liabilities and equity 81000
Answer:
Sardar Shaker Ibrahim 22
23. 23
Credit Risk
• Basle Committee on Banking Supervision defines
credit risk as
– “the potential that a bank borrower or counterparty will
fail to meet its obligations in accordance with agreed
terms.”
– In relation to loans made by the bank, it is the risk that a
loan is not repaid (in part or in full)
• Banks face credit risk not only for loans but also for
OBS instruments like derivatives, where it is known
as ‘counterparty risk’
Sardar Shaker Ibrahim
24. The line items to be included in the balance sheet are up to
the issuing entity, though common practice typically
includes some or all of the following items:
• Current Assets:
• Cash and cash equivalents
• Credit and advances
• Financial investments for sale
• Receivables
• Other assets
• Non-Current Assets or fixed assets:
• Property, plant, and equipment
• Projects under construction
• Goodwill Sardar Shaker Ibrahim 24
25. • Current Liabilities:
• Trade and other payables
• Accrued expenses
• Current tax liabilities
• Current portion of loans payable
• Other financial liabilities
• Liabilities held for sale
• Non-Current Liabilities:
• Loans payable
• Deferred tax liabilities
• Other non-current liabilities
• Equity:
• Capital stock
• Additional paid-in capital
• Retained earnings
Sardar Shaker Ibrahim 25
26. Analyzing Bank Performance with Financial
Ratios
Profit ratios:
1. Return on equity (ROE) is the amount of net
income returned as a percentage of shareholders equity.
Return on equity measures a bank’s profitability by
revealing how much profit a bank generates with the
money shareholders have invested.
If the ROE is relatively low compared with other banks, it
will tend to decrease the bank’s access to new capital
needed to expand and maintain a competitive position in
the market. Also it may limit a bank’s growth.
ROE = Net income/ Total equity* 100
Sardar Shaker Ibrahim 26
27. 2- Return on assets (ROA):
Because owners of a bank must know whether
their bank is being managed well, they need
good measures of bank profitability. It provides
information on how efficiently a bank is being
run because it indicates how much profit is
generated .
ROA = Net income/ Total assets* 100
Sardar Shaker Ibrahim 27
28. There is a direct relationship between ROA and ROE.
This relationship is determined by the equity
multiplier (EM), the amount of assets per dollar of
equity capital:
ROE= ROA* EM
Net profit / equity capital= net profit / assets*
assets/ equity capital
EM= Assets/ equity capital
Sardar Shaker Ibrahim 28
29. 3- Profit margin: The profit margin ratio, also
called the return on sales ratio or gross profit ratio, is
a profitability ratio that measures the amount of net
income earned with each dollar of sales generated
by comparing the net income and net sales of a
bank.
In other words, the profit margin ratio shows what
percentage of sales are left over after all expenses
are paid by the bank.
Profit margin= Net income/ operating revenue
Sardar Shaker Ibrahim 29
30. 4- Net interest margin (NIM) is a measure of the
difference between the interest income generated by
banks or other financial institutions and the amount
of interest paid out to their lenders.
Sardar Shaker Ibrahim 30
31. Analyzing Bank Performance with Financial
Ratios
• Risk ratios: Financial risk ratios are primarily
used to assess a bank's capital structure and
current risk level as evaluated in relation to the
bank's debt level. The ability of a bank to manage
its outstanding debt effectively is critical to the
bank's financial soundness and operating ability.
1)- Leverage ratio= Total equity/Total assets
Sardar Shaker Ibrahim 31
32. 2)- Working capital is the excess of current assets
over current liabilities, a measure of its liquidity,
meaning its ability to meet short-term liabilities:
Working Capital = Current Assets – Current
Liabilities
3)- Current ratio is a liquidity ratio that measures a
bank’s current assets to current liabilities.
Current ratio= Current Assets/Current Liabilities :
1
Sardar Shaker Ibrahim 32
33. Other financial ratios
Tax rate = Total taxes paid/Net income before taxes
Dollar gap ratio: The value of all interest rate-
sensitive assets divided by the value of all
interest rate-sensitive liabilities owned by a bank.
= Interest rate sensitive assets – Interest
rate sensitive liabilities / Total assets
where rate-sensitive means short-term with
maturities of less than one year (or re priced in less
than one year).
Sardar Shaker Ibrahim 33
34. Quiz:
• Amad bank has the flowing accounts in March 2016:
$5000 saving deposits, $780 time deposits, borrowing $ 90000,
retained earnings $4700, buildings $7300, and demand deposits
$7000. The bank is obligated to pay 35% of their loans after two
years and 65% in October 2016. Imagine the bank has been well
run and they got 2% as return on their equities. We assume that
all retained earnings are total equity for Amad bank.
Calculate the flowing ratios:
1. ROA
2. Working capital
3. Net income
Sardar Shaker Ibrahim 34
35. • Answer:
Current liabilities= 7000+5000+780+58500=71280
Total liabilities= 71280+31500= 102780
Total equity= 4700
Total assets= Total liabilities+ Capital
Current assets+ 7300= 102780+ 4700
Current assets= 100180
Total assets= 100180+7300= 107480
1)- ROE= ROA*EM
EM= Total assets/ Total equity
EM= 107480 /4700= 22.868
ROE= 2*22.868= 45.74
2)- Working capital= Current assets- Current liabilities
= 100180- 71280= 28900
3)- Net income
ROE= Net income/ Total equity
2= Net income/ 4700
Net income= 9400
Sardar Shaker Ibrahim 35
36. Using the information below, prepare in good form a Statement
of Cash Flows for Bank A on the following page. Information
from the December 31, 2012 and 2011 balance sheets of Bank A
are presented below.
2012 2011
Cash $ 30,000 $ 50,000
Accounts Receivable, net 410,000 460,000
Inventory 300,000 320,000
Prepaid Expenses 20,000 15,000
Long-Term Investments 50,000 25,000
Land 560,000 300,000
Buildings and Equipment 2,000,000 1,900,000
Accumulated Depreciation (800,000) (770,000)
$ 2,570,000 $ 2,300,000
Accounts Payable $ 300,000 $ 120,000
Accrued Liabilities 40,000 50,000
Bonds Payable 500,000 800,000
Common Stock, $2 par value 200,000 160,000
Paid-in Capital in Excess of Par Value 710,000 550,000
Retained Earnings 670,000 620,000
$ 2,570,000 $ 2,300,000
Sardar Shaker Ibrahim 36
37. Additional information about 2012 transactions and
events:
1. Net income was $110,000.
2. Depreciation expense on buildings and
equipment was $60,000.
3. Sold equipment for cash of $17,000 and the
original price of equipment was $50,000 and
accumulated depreciation of $30,000.
4. Paid cash dividends of $60,000.
5. Purchased long-term investments for $25,000.
6. Paid $300,000 on the bonds payable.
7. Issued 20,000 shares of $2 par value common
stock for $200,000.
8. Purchased land for $260,000.
Sardar Shaker Ibrahim 37
38. Sardar Shaker Ibrahim 38
Bank A
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash Flows from Operating Activities:
Net Income $110,000
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation Expense 60,000
Loss on Sale of Equipment 3,000
Decrease in Accounts Receivable 50,000
Decrease in Inventory 20,000
Increase in Prepaid Expenses (5,000)
Increase in Accounts Payable 180,000
Decrease in Accrued Liabilities (10,000)
Net Cash Provided by Operating Activities $408,000
Cash Flows from Investing Activities:
Sale of Equipment $17,000
Purchase of Long-Term Investments (25,000)
Purchase of Land (260,000)
Net Cash Used by Investing Activities (268,000)
Cash Flows from Financing Activities:
Payment of Dividends $(60,000)
Payment of Bonds Payable (300,000)
Issuance of Common Stock 200,000
Net Cash Used by Financing Activities (160,000)
Net Decrease in Cash $(20,000)
Cash at Beginning of Year 50,000
Cash at End of Year $30,000
39. Example:
Barclays bank had a gross profit of $2,500,000 for the year
2015. Operating expenses and interest expense gained in
that same year were $595,000 and $362,000, respectively.
Compute the amount of tax for Barclays bank for the year
2015. The tax rate for that year is 9%.
Answer:
Tax rate = Total taxes paid/Net income before taxes
Gross profit $2,500,000
Operating expenses (595,000)
Interest expense (362,000)
Income before tax $1,543,000
9%= Total tax paid/ 1543000
Total tax paid= 0.09* 1543000= 138870
Sardar Shaker Ibrahim 39
40. Example:
Lloyds bank had a gross profit of $2,5500,000 for the year 2015.
Operating expenses and interest expense gained in that same
year were $595,000 and $362,000, respectively. The amount of
tax paid for that year was 4500000. Compute the tax rate for
Barclays bank for the year 2015.
Gross profit $2,5500,000
Operating expenses (595,000)
Interest expense (362,000)
Income before tax $24543000
Tax rate = Total taxes paid/Net income before taxes
Tax rate= 4500000/24543000
Tax rate = 1.84%
40Sardar Shaker Ibrahim
41. Bank Deposits
Deposits are a key source of low cost funds for
banks.
It is necessary to classify the deposits; basically
there are three types of deposits:
1)- Time or term deposits – These are an amount
of cash that are deposited by savers for a fix
period of time hence they can withdraw the
deposit only on the maturity of deposit. If it is
withdrawn in advance then it involves penalty.
They offer the maximum amount of interest.
Sardar Shaker Ibrahim 41
42. 2)- Saving deposits – This is a kind of demand
deposit and there is certain limit on number of
withdrawals from the account during a specific
period of time, also account holder has to maintain
minimum balance in the account which is decided
by the bank. Interest rates offered on these deposit
is lower than that of term deposits.
3)- Current accounts or current deposits;
It is similar to saving deposit but it does not offer
any interest and hence there is no limit on the
number of withdrawals by individuals from his
account.
Sardar Shaker Ibrahim 42
43. Interest rate on deposits
• Interest is the price paid for the use of money.
– The bank is using your money when you deposit
funds. In some cases the bank pays you for the
use of your money.
• Examples of intervals include
– Annually—once a year
– Semi-annually—every six months
– Quarterly—every three months
Sardar Shaker Ibrahim
43
44. Simple Interest
• Simple interest – interest is paid only on the
principal. To find simple interest we use the
following formula:
I = prt
Interest
Principal
Interest rate
written as a
decimal
The amount of
time the money is
invested or
borrowed (years)
Sardar Shaker Ibrahim 44
46. Compound Interest
Example2: $32000 is invested at 10% for 2 years.
Find the interest compounded yearly,
semiannually, quarterly, and monthly
yearly:
semiannually:
20.6896$32000$20.38896$
20.38896$)05.1(32000$)1( 4
PMI
iPM n
6720$32000$38720$
38720$)10.1(32000$)1( 2
PMI
iPM n
Sardar Shaker Ibrahim 46
48. Daily and Continuous Compounding
• Example2: Find the compound amount if $1200 is
deposited at 8% interest for 11 years if interest is
compounded continuously.
08.1693$
1200$08.2893$
08.2893$
1200$ 08.011
PMI
ePeM yr
Sardar Shaker Ibrahim 48
49. Deposit Multiplier:
The formula for deposit multiplier is:
K = 1/r
K = Deposit multiplier
r = ratio of cash reserve to deposit
The higher the cash reserve ratio the lower will be the deposit
multiplier. The total creation is additional cash multiplied by
deposit multiplier, K.
Example 1: When A bank obtains $80000 deposit, with a 20
percent. What will be the total creation of deposit?
1/0.2* $80000= $400,000
Hence, deposit multiplier is 1/r
1/0.2= 5
Sardar Shaker Ibrahim 49
50. Example 2:
Suppose bank Raffidden obtains $900,000
deposit, with a 12 percent. What will be the
total creation of deposit?
The total of deposit creation amounts will be
$75000, as it is clear from the bellow:
1/0.12* $900000= $75000
Hence, deposit multiplier is 1/r
1/0.12= 0.083
Sardar Shaker Ibrahim 50
51. Example1:
On 1/1/2000 a bank is established with capital of
6,000,000 dinars deposited half of their capital at central
bank and the remaining of that amount kept at treasury.
at the starting of the bank these operations happened:
1. Provided amount of 630,000 to cash payments fund at
the beginning day.
2. Purchased a building with 150,000 and furniture with
50,000 and cars with 80,000 by cash.
3. Provided the branch 3 with amount 40,000.
4. Draw amount of 300,000 cash from central bank.
5. Paid salaries of employee 100,000 by cash.
6. Depositors deposited amount of 290,000 at saving
deposits.
Sardar Shaker Ibrahim 51
52. 7. Clients deposited 150,000 at current account payable.
8. Clients deposited 80,000 at time deposits.
9. Depositors withdraw 50,000 from term deposits.
10. Took out amount of 40,000 from current account debts.
11. Bank collected a bill with an amount of 81,000.
12. Paid bills to customers from bank account by 50,000.
13. Saving depositors withdraw 30,000 from their deposits.
Requirements:
1)- Record all daily entries.
2)- prepare statements of cash( cash receipt, cash payment
and treasury).
3)- prepare trial balance.
Sardar Shaker Ibrahim 52
53. Answer:
central bank 3000,000
treasury 3000,000
capital 6000,000
1)-
Branches 630,000
Main treasury 630,000 this entry will not be recorded because money is transferred
at the same bank.
2)-
building 150, 000
furniture 50,000
car 80,000
treasury 280,000
3)-
branch3 40,000
treasury 40,000
4)-
main treasury 300,000
central bank 300,000
5)-
employee salary 100,000
treasury 100,000
Sardar Shaker Ibrahim 53
54. 6)-
treasury 290,000
saving deposits 290,000
7)-
treasury 150,000
current account payable 150,000
8)-
treasury 80,000
time deposits 80,000
9)-
term deposits 50,000
treasury 50,000
10)-
current account receivable 40,000
main treasury 40,000
11)-
treasury 81,000
collected bills 81,000
12)-
Bills 50,000
treasury 50,000
13)-
saving deposits 30,000
treasury 30,000
Sardar Shaker Ibrahim 54
55. The daily movements of cash to the fund of cash payments.
Receivables payables
Details Amount Details Amount
Received money
from treasury
630,000 Buildings 150,000
Furniture 50,000
Car 80,000
Branch 3 40,000
Employee salaries 100,000
Term deposits 50,000
Current account
receivable
40,000
Bills 50,000
Saving deposits 30,000
630,000 Total Total 590,000
Transfer to main
treasury at the end of
date
40,000
Sardar Shaker Ibrahim 55
56. The daily movements of cash at the fund of cash
receivables.
Receivables payablesDetails Amount Details Amount
Saving
deposits
290,000
Current
account
payable
150,000
Time
deposits
80,000
Collected
bills
81,000
601,000 0
601,000 Transfer this
amount to main treasury at the end of date
Sardar Shaker Ibrahim 56
57. The daily movement of cash at the
main treasury
Detail Amount Detail Amount
Capital 3000,000 Paid at the begging
day to the cash
payments fund
630,000
Central bank 300,000
Remain from fund of cash
payments
40,000
Received from fund of cash
receivables
601,000
Total 3,941,000
3,311,000 cash round on 2/1/2000
Receivables payables
Sardar Shaker Ibrahim 57
58. Trail balance for the bank
Debt Credit Details
3000,000 Central bank
3000,000 Treasury
6000,000 Capital
150,000 Building
50,000 Furniture
80,000 Car
280,000 Treasury
40,000 Branch 3
40,000 Treasury
300,000 Main treasury
300,000 Central bank
100,000 Employee salaries
100,000 Treasury
290,000 Treasury
290,000 Saving deposit
150,000 Treasury
150,000 Current account payable
Sardar Shaker Ibrahim 58
59. Debt Credit Details
80,000 Treasury
80,000 Time deposit
50,000 Term deposit
50,000 Treasury
40,000 Current account receivable
40,000 Main treasury
81,000 Treasury
81,000 Collected bills
50,000 Bills
50,000 Treasury
30,000 Saving deposit
30,000 Treasury
7,491,000 7,491,000 Total
Sardar Shaker Ibrahim 59
60. Example1:
One day Kurdistan international bank received from Zinar company the
following cheques in order to receive it and clear their amounts on behalf of
Zinar company and record it in their accounts.
cheques drawn on warka bank:
10,000 cheque n. 30
15,000 cheque n. 15
13,000 cheque n. 60
9,000 cheque n. 57
cheques drawn on Gara bank:
20,000 cheque n. 68
70,000 cheque n. 20
50,000 cheque n.18
30,000 cheque n.42
Cheques drawn on Cihan bank:
35,000 cheque n. 41
47,000 cheque n. 66
80,000 cheque n. 75
12,000 cheque n. 84
Sardar Shaker Ibrahim 60
61. Required:
1. Prepare deposit slip for the above cheques.
2. prepare statements of sending related to above
cheques.
3. Prepare a model of cheques to the clearing
house. If you know that Kurdistan national bank
has found in its vaults three uncovered cheques
including:
Amirald bank (Four cheques) with amount of
115,000
Zanko bank (three cheques) with amount of 99,000.
Sumel bank (five cheques) with amount of 20,2000.
Sardar Shaker Ibrahim 61
62. Answer:
Kurdistan national bank
Deposit slip
Amount Drawee cheque bank Number of cheque
10,000 warka bank 30
15,000 warka bank 15
13,000 warka bank 60
9,000 warka bank 57
20,000 Gara bank 68
70,000 Gara bank 20
50,000 Gara bank 18
30,000 Gara bank 42
35,000 Cihan bank 41
47,000 Cihan bank 66
80,000 Cihan bank 75
12,000 Cihan bank 84
391,000
Sardar Shaker Ibrahim 62
63. Kurdistan national bank
Sending cheques to clearing house
Cheuqes drawn on warka bank
Amount Cheque number
10,000 30
15,000 15
13,000 60
9,000 57
47,000
Kurdistan national bank
Sending cheques to clearing house
Cheuqes drawn on Gara bank
Amount Cheque number
20,000 68
70,000 20
50,000 18
30,000 42
170,000
Amount Cheque number
35,000 41
47,000 66
80,000 75
12,000 84
174,000
Kurdistan national bank
Sending cheques to clearing house
Cheuqes drawn on Cihan bank
Sardar Shaker Ibrahim 63
64. Prepare a model of cheques to the clearing house
Receivable cheques Name of bank Drawn cheques Number
Warka bank 47,000 4
Gara bank 170,000 4
Cihan bank 174,000 4
115,000 Amirald bank 4
99,000 Zanko bank 5
202,000 Sumel bank 3
416,000 391,000
25,000
Current account 416,000
Central bank 25,000
Outstanding cheques 391,000
Sardar Shaker Ibrahim 64
65. Bill of exchange contains:
1. The term "bill of exchange" must be noted on the face of the document and expressed in the
language employed in drawing up the instrument.
2. Drawer (ABC Company Ltd.: the customer, negotiation applicant)
3. Amount (US$55,800.00: amount requested for negotiation together with currency indication.
4. Drawee, place of payment (HIJ BANK, New York: the payer and the place of payment of the amount of
the bill indicated in the bill of exchange.
5. Maturity (30 DAYS AFTER SIGHT: as required in the bill of exchange.
6. Payee (BTMU: negotiating bank of the bill).
7. Date and place of issue (OCTOBER 10, 2008, TOKYO) .
8. Issuing bank of the L/C, L/C No., date of issue (HIJ BANK, New York; HIJLC1234567890; April 10, 2008).
9. Applicant of the L/C (XYZ Corporation New York: payer of the import proceeds).
Sardar Shaker Ibrahim 65
66. Discounting of a bill of exchange
• If the drawer of the bill does not want to wait till the due date of the bill
and is in need of money, he may sell his bill to a bank at a certain rate of
discount. The bill will be endorsed by the drawer with a signed and dated
order to pay the bank. The bank will become the holder and the owner of
the bill. After getting the bill, the bank will pay cash to the drawer equal to
the face value less interest or discount at an agreed rate for the number of
days it has to run. This process is know as discounting of a bill of
exchange.
Interest is calculated using the following equation:
Interest= Par value × rate × time (days/ 365) or (month/ 12).
And the commission is calculated as follows:
The amount of commission = par value × commission rate
Sardar Shaker Ibrahim 66
67. Example:
For example, a drawer has a bill for $10,000. He
discounted this bill with his bank two months
before its due date at 15% rate of discount.
Answer:
Discount will be calculated as the follow:
10,000 × 15/100 × 2/12 = 250
Thus the drawer will receive a cash worth
$9,750 and will bear a loss of $250.
Sardar Shaker Ibrahim 67
68. Example:
• A sold goods to B for $10,000 on credit on 1st
July, 2005. On the same date, A drew two bills on
B for $6,000 and $4,000 at two months and three
months respectively. On 4th July the first bill was
discounted at the bank at 15% On 6th July, the
other bill was sent to the bank for collection. On
the due date, both the bills were honored and
the bank deducted $40 as bank charges.
• Required: Give journal entries in the books of A,
B and the bank.
Sardar Shaker Ibrahim 68
69. Date Particulars Amount (Dr.) Amount (Cr.)
1.7.2005 B A/C....................................................Dr.
Sales A/C
(Goods sold on credit)
10,000
10,000
1.7.2005 Bill receivable A/C...............................Dr.
B A/C
(Acceptance received at two months)
6,000
6,000
1.7.2005 Bill receivable A/C...............................Dr.
B A/C
4,000
4,000
4.7.2005 Bank A/C............................................Dr.
Discount A/C......................................Dr.
Bill receivable
(Bill discounted @ 15% p.a.)
5,850
150
6000
6.7.2005 Bank for collection..............................Dr.
Bill receivable A/C
(Bill sent to bank for collection)
4,000
4,000
4.10.2005 Bank A/C..........................................Dr.
Bank for collection A/C
(Bill collected by bank on due date)
4,000
4,000
4.10.2005 Bank charges A/C..............................Dr.
Bank A/C
(Amount deducted by bank as collection
charges)
40
40
A
Sardar Shaker Ibrahim 69
70. Date Particulars Amount (Dr.) Amount (Cr.)
1.7.2005 Purchases A/C.................................
A A/C
(Goods purchased on credit)
10,000
10,000
1.7.2005 A A/C.......................................
Bill payable A/C
(Acceptance given at two months)
6,000
6,000
1.7.2005 A A/C...............................
Bill payable A/C
(Acceptance given at three
months)
4,000
4,000
4.9.2005 Bill payable A/C…………..
Cash A/C………………..
(Acceptance paid on presentation)
6,000
6000
4.10.2005 Bill payable
A/C...................................
Cash A/C
(Acceptance paid on presentation)
4,000
4,000
B
Sardar Shaker Ibrahim 70
71. Date Particulars Amount (Dr.) Amount (Cr.)
4.7.2005 Bill receivable A/C..............................
A A/C
Discount
(Bill discounted @ 15%)
6,000
5,850
150
6.7.2005 No journal entry is made in the books of bank
when bill is received from customer for
collection.
4.9.2005 Cash A/C...........................................
Bill receivable A/C
(Discounted bill presented and cash received)
6,000
6,000
4.10.2005 Cash A/C.........................................
A A/C
(amount collected on behalf of customer.)
4,000
4,000
4.10.2005 A A/C..............................................
Collection charges A/C
(service charges deducted from A's account)
40
40
B
A
N
K
Sardar Shaker Ibrahim 71