What is OSS and FSS?
OSS measures ability to survive, while FSS is a better indicator of ability to grow. MFI managers should seek to achieve an FSS ratio greater than 100 percent. FSS can be affected by external factors, such as the local market rate for borrowings, which can lead to annual fluctuations.
How do you calculate OSS?
The OSS is defined as the ratio of an MFI’s operating revenues to it operating expenses including the financial costs and impairment losses on loans. The outreach of an MFI, the write- off ratio and regional differences are found significant in determining the OSS of MFIs.
What is financial self sufficiency?
Financial Self-Sufficiency is a ratio that is used in order to evaluate if the company is able to generate enough revenue to cover its costs while ensuring that the equity value is sustained, after incorporating inflation, and another cost of capital.
What is self sustainability in microfinance?
By definition, an MFI has a dual objective: to cover its costs (self-sufficiency) and to reach many poor borrowers (outreach) (Hartarska & Nadolnyak, 2007). The self-sustainability approach focuses more on a formal financial system where success is measured through profitability.
What is a good self sufficiency ratio?
So, the financial self-sufficiency ratio is 112.90 % which means that the company is doing well to earn sufficient operating revenues to cover its total cost as well as maintaining its value of equity relative to inflation.
What is operational self sufficiency and financial self sufficiency?
Abstract. Operational Self Sufficiency (OSS), expressed in percentage terms, provides an indication as to whether a Microfinance Institution (MFI) is earning sufficient revenue (through interest, fee and commission income) so as to cover its total costs-financial costs, operational costs and loan loss provisions.
How do I become financially self-sufficient?
To become financially independent, create a plan that allows you to build your net worth. Create a budget that helps you monitor your income and expenses, save for specific goals, reduce you tax burden and stay out of debt.
What is the meaning of self sustainable?
1 : maintaining or able to maintain oneself or itself by independent effort a self-sustaining community. 2 : maintaining or able to maintain itself once commenced a self-sustaining nuclear reaction.
What are the benefits of being self sufficient?
It provides us with intrinsic rewards like a sense of achievement, self-esteem and self-confidence. Self-sufficiency doesn’t mean ‘going it alone’, indeed it is good to be interdependent, where people support each other reciprocally for mutual benefit.
What does self sufficiency standard mean?
The Self-Sufficiency Standard defines the amount of income necessary to meet basic needs (including taxes) without public subsidies (e.g., public housing, food stamps, Medicaid or child care) and without private/informal assistance (e.g., free babysitting by a relative or friend, food provided by churches or local …
Which is the best definition of operational self sufficiency?
Operational Self Sufficiency Definition. Operational self-sufficiency (OSS) is the ratio that is usually used in the Microfinance Institution (MFI) to analyze its ability in generating operating revenues or incomes in order to cover the total cost incurred in running the business.
What is the formula for financial self sufficiency?
Financial Self-Sufficiency is calculated using the following formula: Financial Self-Sufficiency = Operating Income / (Operating Expenses + Financial Cost + Loan Loss Provision + Cost of Capital (imputed))
What’s the difference between Oss and FSS in MFI?
Measures how well an MFI can cover its costs to operating revenues and expenses. OSS measures ability to survive, while FSS is a better indicator of ability to grow. MFI managers should seek to achieve an FSS ratio greater than 100 percent.