Definitions of Selected Financial Terms, Ratios, and Adjustments for Microfinance

Topic :

The guideline begins by highlighting that the microfinance industry recognises and agrees on the need to establish standard definitions of financial terms and common indicators to assist in making comparisons between MFIs more meaningful and promote more transparency in MFI reporting. Transparency, it notes, is increasingly important in the industry as mature MFIs look to commercial funding sources and investors to support their growth.

The primary objective of this document is to put forward standard definitions for selected financial terms and to suggest a standard method of calculating certain financial ratios. The document is divided into three sections:

  1. a list of financial terms and definitions
  2. a description of financial ratios, and
  3. a brief discussion and description of financial adjustments

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