Lecture 58: Understanding Gearing and Leverage ratios (Debt equity ratio)- Solvency ratio

[@vikasagarwal7719]

It’s grt Ankush, we r working in this field since last 14 years but didn’t get the time or u can say didn’t have that passion to try to help others. I also started as a fresher and didn’t have this kind of stuff and have learned on my own. But for current people this is just gold. Keep up Buddy 👍. Would like to contribute in any manner I can, if u permit.

[@AnkushJain]

Thank you Vikas ji. If this channels reaches all needy ones then it will be biggest contribution for our society.

[@atulvaidya9909]

Respected sir you are doing a great job by making such videos. I am also the fresher in banking industry and I am finding your videos of great help for accessing loan files. Thanks a lot🙏

[@AnkushJain]

Thank you

[@ankursaxena7523]

Hello dear.... I got your reference from one of my colleagues... really concept clarity is at another level....god bless you..... please always spread financial awareness in such a way.... Regards Ankur saxena Chief Manager PNB

[@AnkushJain]

Thank you 😊

[@komalpreetsingh1431]

Very good lecture sir 👍

[@AnkushJain]

Thank you

[@pranjalsoni4382]

Sir don't take any tension after few days your channel become 2-3 million subscribers

[@AnkushJain]

Thank you 😊

[@chiragparikh4553]

Sir, apki trick ekdam badhiya he samjane ki, maja aa gaya, books me formula dekh ke padhe usme koi knowledge nahi milta he, is me apne practically bahut badhiya samajaya..Thanks you sir.🙏.Aap aese hi video banate raho to vo hamare liye bahot hi achha he jo dusre se aisa kabhi knowledge nai milega..Dhnyavad sir..i want to learn all ratio analyasis from your chanel so pls provide me video as possible.

[@AnkushJain]

Thank you 👍

[@sanjupal7532]

This is help us a lot but some tym we aren't comments do only like. So keep posting sir ji

[@AnkushJain]

👍👍

[@janakbhimani6071]

CMA prepration video help me a lot as i am CA and working with project finance

[@AnkushJain]

Thank you

[@prabhatkumar4349]

Sir truly truly awesome and this type of concept and approach is never seen it shows the real picture of business and the intent of the owner also thanks a lot sir

[@AnkushJain]

Thank you

[@ashishtapase6085]

Best of the best knowledge sharing session..!!

[@AnkushJain]

Thank you

[@sohailhussain7493]

U are great Ankush ji bahut acche se samjhate hai

[@AnkushJain]

Thank you

[@ramudgaryadav2760]

Great jain sir

[@AnkushJain]

Thank you

[@AnandShrivastava95]

Really , too much useful for me as I am working in finance industry

[@AnkushJain]

👍

[@sakshiaggarwal1260]

Very nicely explained Sir😊

[@AnkushJain]

Thank you

[@ankitsharma-bz5kv]

Thanks Sir very nicely explained

[@AnkushJain]

Thank you

[@yuvrajpatil1111]

Thank you for your support 🙏

[@AnkushJain]

Your welcome

[@AJ-ll9kz]

Outstanding 👍

[@AnkushJain]

Thank you

[@ashishijardar1334]

First time learning ratios was interesting

[@AnkushJain]

Thank you 👍

[@Lelomotivation_hub]

Very knowledgeable vedio thanks

[@AnkushJain]

Your welcome 👍

[@abhishekverma-me6zu]

Very good explanation 👏

[@AnkushJain]

Thank you

[@anirban28]

outstanding......

[@AnkushJain]

Thank you

[@dikshamehta8355]

Thanks a lot sir

[@AnkushJain]

👍 your welcome

[@soniamittal4130]

Thnk u soo much sir... video helps me alotss

[@AnkushJain]

Your welcome 😊

[@armaandubey8460]

Great work sir I'm planning to start my own startup your financial video are really useful kindly please also start making financial basic of startup video

[@AnkushJain]

Thank you

[@TheSuresh2022]

Sir, gearing ratio 3:1 hamari funding dene ke bad itni honi chahiye?? Ya funding se pehle 3:1 honi chahiye??

[@AnkushJain]

Funding k baad

[@IndiaFitNFineFree]

Yes

[@RONAKTHUMAR]

Very fruitful 🙏

[@AnkushJain]

Thank you

[@digvijaysinghnegi9237]

Excellent sir

[@AnkushJain]

Thank you

[@anamikachaturvedi7077]

Thank you so much sir 🙏

[@AnkushJain]

Your welcome

[@himanshusinghal1362]

Its really nice Sir…i really enjoyed watching your video…please keep posting❤❤❤❤❤❤❤

[@AnkushJain]

Thank you 🎉

[@kimtonsing1067]

Thank you sir...ek realistic way of seeing balance sheet and formulas bata diya aapne 🙂🙂🙂

[@AnkushJain]

Thank you 👍

[@SatishGupta-cv8mb]

Remarkable

[@AnkushJain]

Thank you

[@saraswatirinku]

Should we reduce Loan and advance given to employees also from ATNW?

[@AnkushJain]

No it is not diversion

[@akgupta-wj1fv]

What is capital employed and explain the formula of Return on capital employed.

[@AnkushJain]

Will make a video

[@tanwiralam5497]

Thank you so much for Such video Sir

[@AnkushJain]

Your welcome

[@himanshuvisbash9370]

Hi sir While calculation leverage ratio, do we consider credtiors amount in TOL ?

[@AnkushJain]

Yes

[@jaysinghlove]

Ap Video dekh kar 1/2 Sal me credit Manager ban jayenge...apke Video dekh kar mai retail banking Liability se Business Banking Asset me moove kar liya hun thanks 🙏

[@AnkushJain]

Thank you 👍

[@AjayYadav-zs1tt]

Very nice sir

[@AnkushJain]

Thank you Ajay

[@jaysinghlove]

Sir ji great 👍 experience❤

[@AnkushJain]

Thank you

[@SiddharthaGautam-q5y]

What about short term interest bearing USL from friends and family . It is a part of TNW of it should be added with the short term / long term interest bearing loans?

[@AnkushJain]

If they are long term in nature then they are part of capital and not debt

[@aryankumar-hc4nc]

And if they are for short term interest bearing loans, then what? Will it be the part of TOL or should we ignore ?

[@sumitagarwal9181]

Sir, unsecured loan taken from relative in which interest to be paid , in this case what we do, should we treat as interest bearing debt or treated as ATNW

[@AnkushJain]

This is your call.. if treated as quasi equity then treat them as part of atnw

[@sidhanthzutshi1113]

Very nice 👍

[@AnkushJain]

Thank you

[@vishnugupta8516]

Sir kindly make one video on HOW TO READ CIBIL REPORT OF INDIVIDUAL AND ENTITY

[@AnkushJain]

Ok will do

[@Chinmayswain-ns4lq]

Just a small modification. In Adj TNW, please duct investment in sister concern. Hence, Adjusted TNW= TNW- Inv Sis concern. Therefore, Gross TOL/TNW looks alluring while TOL/Adj. TNW looking dangerous.

[@AnkushJain]

👍👍

[@VIKASHKUMAR-ch4fn]

Sir Great Job!

[@AnkushJain]

Thank you

[@cadeependrabhadoriya4194]

Sir agar mein subscription leta hun to jo old class hai wo dekne ko milengi

[@AnkushJain]

Yes

[@specialbanker2501]

Sir, we check EMI with EBITDA or cash profits?

[@AnkushJain]

Should be checked with EBITDA

[@specialbanker2501]

@@AnkushJain why sir? Cash profits are the actual ones, and depicts factual paying capacity of client.

[@AnkushJain]

Your emi includes interest also while cash profits are post deduction of interest. Therefore there will be mismatch in numerator and denominator as numerator which is cash profit are post deduction of interest while in denominator which is emi include interest also. So if you want to consider only cash profit then only consider principle portion of emi in denominator to get accurate results

[@nareshz999]

plz make a video on how to improve financial ratios so that we can perform well in interview.

[@AnkushJain]

Methods to improve are incorporated in the videos itself. Pl refer this playlist kzbin.info/aero/PLjlclsu02a_z210w1g5SBcZLMGOK4QaQm

[@sriram2sri]

Sir we will also add goodwill , revaluation reserves for atnw

[@AnkushJain]

They shall be deducted from atnw

[@gauravamazingfacts4124]

Sir, Got Good Marks in Jaaib 2nd Paper. Thanks a lot. Now, I think 3rd Paper Wala Syllabus bhi Aap Padhaiye

[@AnkushJain]

Oh, i don't even know the syllabus of 2nd paper. Does any topic of it was covered in my videos?

[@gauravamazingfacts4124]

@@AnkushJain Sir, Letter of Credit, Bank Guarantee, Ratio, Working Capital etc...as many questions are found relatable. LC Limit Calculation direct question. Paper 2 Name is Finance and Accounting Aspects in Banking.

[@AnkushJain]

Ok 👍

[@siddharthabarua7153]

Sir you can surely teach by having videos for JAIIB and caiib syllabus

[@mohitchandrajoshi4454]

Will we decuct Investment in property from loan and advances for which loan has been taken as mentioned in liability side

[@AnkushJain]

Investment in property where you are able to identify source of finance specifically in balance sheet, need not to be included in advances i.e. no need to consider it as diversion of capital

[@mohitchandrajoshi4454]

Even If this property is taken for residential propose then we will not consider it as diversion

[@mohitchandrajoshi4454]

@@AnkushJain can you explain why we would not consider it as diversion beacuse resdidential property is not use for business purpose

[@AnkushJain]

Pl rethink again. What is diversion of funds? Diversion of funds means your capital is invested in non operating assets. In other words, to invest in non operating asset you have raised funds from your own capital. But if in case, on liab. Side you have specific bank loan appearing which you know is specifically invested in a particular asset. Then how can we consider it as diversion of funds?

[@mohitchandrajoshi4454]

@@AnkushJain It means if loan is taken on business name then it is use for business like resi cum office

[@Commerceconcept666]

Sir so open kha se hogi

[@AnkushJain]

@@Commerceconcept666 kzbin.info/door/E4CwHclbqMgdYCH6lDQmDAjoin Joining link for membership

[@पवनगेदर-च4द]

Sir ye CMA report Term loan, project finance and working capital loan in sabhi ke liye bnana pdta h ya only wc finance ke liye?

[@AnkushJain]

Sabke liye

[@पवनगेदर-च4द]

@@AnkushJain thankyou sir

[@casubhashchandra3824]

Will all intangible (including software) be deducted from net worth for TNW or not

[@AnkushJain]

Not all intangible assets. Software has a cost therefore should not be deducted

[@casubhashchandra3824]

@@AnkushJain thanks actually this is asked in interview and i have same view so i just want to confirm with u

[@AnkushJain]

Yeah it's fine 😊👍

[@saraswatirinku]

Intangible assets for which expenses are booked in PNL should not be deducted from TNW ?

[@vaibhavsharma646]

Sir what is the main difference between D/E ratio and TOL/TNW

[@AnkushJain]

One is gearing and other one is leverage.. both of them explained in this video itself

[@vaibhavsharma646]

It means D/ E means gearing ratio and TOL/TNW means leverage ratio

[@AnkushJain]

Yes

[@kumarsaurabh2614]

sir solvency ratio is similar to promoters margin in business

[@AnkushJain]

Yeah related to it

[@pranjalsoni4382]

Sir dono ratio me means aapki jo equity hai wo kam honi chaiye yaa jada yaa equal samajh me nhi aaya

[@AnkushJain]

Jitni equity jyada hogi utni ratio achi bnegi

[@pranjalsoni4382]

Ok sir

[@AnkushJain]

👍👍

[@positiveinvestor]

Thank you sir... Could you please make a video on cash flow and fund flow?

[@AnkushJain]

Yeah sure. Not an issue

[@positiveinvestor]

@@AnkushJain thank you🙏🙏

[@AnkushJain]

👍

[@the_accidental_banker]

Sir, there's one interview question: If Debt to Equity is 5:1 and all debts include loans from related parties. Would the Bank provide Working Capital to such a customer? Request your guidance.

[@AnkushJain]

Yeah if those debts are quasi in nature then we can consider them part of capital and therefore debt equity ratio can become comfortable

[@the_accidental_banker]

@@AnkushJain thank you Sir Ji 🙏

[@AnkushJain]

👍👍

[@chetanagarwal9898]

Thank You Sir!!!!🙏

[@AnkushJain]

👍

[@deekshabansal76]

Hello sir, if any firm is having a very bad debt to equity ratio, than in this situation, should i take a call on this case or directly reject it? Please suggest

[@AnkushJain]

How much is the loan amount and whether case is ok in all the rest analysis checks?

[@deekshabansal76]

The case is ok in other parameters. If i take a call on this case then what should the mitigants. Let say, if debt to equity is 6 times then what are other ratios i need to calculate to mitigate this?

[@AnkushJain]

Mainly take call on turnover, banking conduct, cibil conduct, collateral cover should be good and quality of collateral should also be good. Mpbf norms should meet and debt to equity in projections will come down with retained profits

[@deekshabansal76]

Ok sir thanks a lot 😊

[@AnkushJain]

👍👍

[@yuvrajshisode2729]

Sir ye capital infusion practically kaise hota hai, please ise bataiye

[@AnkushJain]

Client puts money from his saving account to current or limit account of the firm. Bank check the entry and also takes certificate from client CA that so and so infusion has been done

[@yuvrajshisode2729]

@@AnkushJain thank you sir

[@AnkushJain]

👍

[@Commerceconcept666]

Sir member wala videos ko general public k liya unlock kar do

[@AnkushJain]

@@Commerceconcept666 vo option nhi hai.. aap membership le lo.. 199 per month manageable hai agar aap self earning kr rhe ho job ya business se

[@Commerceconcept666]

M apply karna Chata hu membership k liya but option show kha se hoga

[@AnkushJain]

@@Commerceconcept666 kzbin.info/door/E4CwHclbqMgdYCH6lDQmDAjoin Joining link 👆

[@Commerceconcept666]

@@AnkushJaintx

[@AnkushJain]

👍👍

[@vinaykumardwivedi2698]

ATNW me investment in subsidiary/loans given under assets side will be deducted

[@AnkushJain]

Yes since they are not invested in business

[@TheSuresh2022]

Sir, we can improve, debt equity ratio but can we improve DSCR

[@AnkushJain]

Only if projections are positive

[@TheSuresh2022]

Ok sir, thanks

[@ca.rahulkumarrathod9587]

Dear sir, if possible make videos no. 58 & 59 available with high resolution(480,720) so that we can download them in high quality.

[@AnkushJain]

Ok will check about it

[@ca.rahulkumarrathod9587]

@@AnkushJain I have tried but it is available for up to 360 quality only.

[@AnkushJain]

Are you watching it over Laptop or TV?

[@AnkushJain]

I had checked but resolution was maximum on my screen recording software. Don't know why it is SD quality

[@ca.rahulkumarrathod9587]

@@AnkushJainNormally I download it first through the snaptub app on mobile and then I watch it on my laptop.

[@yadavaashish4276]

Please reply Because i am interested to buy ttml shere

[@AnkushJain]

Replied

[@TheSuresh2022]

Sir, channel finance bhi add hoga interest bearing debt me???

[@AnkushJain]

Yes

[@amanbhardwaj1000]

Sir, ..let's say I'm doing a case of proprietorship ... and I come across an investment in gold by him . Which is shown in balance sheet..... So, should I deduct that investment from his capital to arrive at right amount of capital invested In his firm? In my opinion deduction of any investment from capital will depend on what kind of capital there in the firm For example, if capital includes only fixed investments like goods carrier , storage house or furniture , then it doesn't make sense to deduct gold investment from the firm's capital But if the capital includes cash also , then it makes sense to do so Please sir, inform me what you think about it... Thanks 😊

[@AnkushJain]

To state your answer practically, it is your call. If you think that overall case is doable then you just treat gold as normal cash and cash equivalent and don't deduct from capital but if you are having overall negative opinion on the case then deduct from capital

[@amanbhardwaj1000]

@@AnkushJain ye sahi tha..😄

[@AnkushJain]

Yeah that's how we actually work right ☺️

[@ca.rahulkumarrathod9587]

Case: A&B are the Group firms. A has lent Rs 100 to B. Treatment is given in CMA: A: While arriving at tangible net worth/adjusted net worth, Rs 100 is deducted as it is considered an advance including ICD(inter-company deposits). This adjusted net worth is considered while calculating the D/E ratio & TOL/TNW ratio. B: While calculating net worth, Rs.100 is considered as quasi-equity. Is this the right treatment according to you sir?

[@AnkushJain]

Yes, if you treating it as diversion in one firm then you will have to consider it as quasi equity in another. Total net effect will be nil at group level. This is helpful only when you are finding both the group firms. If you are funding only A, then your ratio will deteriorate and if you are funding only B then you might want to cross check whether the advance to be considered as quasi or not

[@bhagwat152]

Thanks a lot sir

[@bhagwat152]

Lot more information got

[@AnkushJain]

Your welcome