Investments and Loans - Financials P12

You can use the Investments and Loans process to control these financial operations. See below the concepts, configurations and how to perform operations to implement these processes in Protheus.

Important Concepts

Allocation

To allocate is to book the profits earned or the interest payable of a loan.

In the allocation of investments by shares, the Income Tax value calculated on revenues in the period is deducted from the balance in investment shares (mandatory withholding of income tax on investments).

In the allocation of other types of investments and loans, only the booking will occur.

Important!

Allocation of Investments and Loans - FINA182

The system changes the date entered in parameters to the last business day of month/year. The calculation of interest/fine is based on this date.

Example:
- Suppose an allocation is made on any given month, dated on the 28th, and that the last business day was the 26th.

- On the allocation of the following month, suppose the last business day was the 31st.

- The system calculates interest on 33 days, which is the number of days elapsed from the last allocation.

Note: This value is not necessarily related to the value calculated in loan installments. The installments are calculated based on their due dates.

Amount

Is the initial capital added to the interest in the period.

Interest

Is the payment for invested or loaned capital, or yet the "rent" paid or charged for using the money. Also the difference between the amount redeemed from a financial investment and its initial value is called interest.

In any monetarist economy, the cost of lending or borrowing any amount must be measured by means of an index between the price of this credit and its value over a given period of time. This index is called interest rate. Said rate is used to measure the payment rate for capital owned by people who own resources, as well as for those who do not and must borrow it.

Simple Interest

In the simple interest system, the interest rate is always borne on starting capital. Hence, the rate is called proportional because its variation across time is linear.

Example: 1% a day reaches 30% a month, which represents 360% a year and so on.

Consider starting capital P invested at an interest rate of i per period, for n periods.

Remember that simple interest is charged from starting capital.

We can write the following formula, easily testable:

Information

J = Interest after n periods of capital P applied at an interest rate per period equal to i.

At the end of n periods, the capital equals the starting capital plus the interest earned in the period. The starting capital plus interest from the period is called AMOUNT (M). So:

M = P + J

J = P + P.i.n

M = P + P.i.n

M = P(1 + i.n)

Example

See below the interest calculation at the end of five years:

P = 3,000.00
I = 5% = 5/100 = 0.05 and n = 5 years = 5.12 = 60 months.
J = 3,000.00 x 0.05 x 60 = 9,000.00.
M = 3000(1 + 0.05x60) = 3,000(1+3) = $12,000.00

Compound Interest

In the compound interest system, the interest rate is borne on starting capital, plus the interest accrued up to the previous period. The rate exponentially varies in the period. In this interest system, 1% a day does not reach 30% a month, which does not represent 360% a year.

Compound interest is more common in the financial system, being more useful for daily problems. The interest borne in each period is added to the principal to calculate interest for the following period.

Capitalization is when interest is added to the principal. After three months of capitalization, we have:

1st month: M =P.(1 + i)

2nd month: the main is equivalent to the previous month: M = P x (1 + i) x (1 + i)

2nd month: the main is equivalent to the previous month: M = P x (1 + i) x (1 + i) x (1 + i)

So, we have the formula:

Important

You must express the i rate in the same measure of time as n; that is, monthly interest rate for n months.

To calculate only interest, subtract the principal from the amount at the end of the period:

Example

Calculation of a capital amount of $6,000.00, invested with a compound interest rate of 3.5% a month, for one year.

P = BRL 6,000.00
n = 1 year = 12 months
i = 3.5 % a month = 0.035
M = ?

Finding M (Amount):

Therefore, the amount is BRL 9,066.41

Relation between interest and progressions

In the simple interest system: M( n ) = P + P.i.n ==> P.A. starting by P and ratio P.i.n

In the compound interest system: M( n ) = P . ( 1 + i )ⁿ ==> P.G. starting by P and ratio ( 1 + i )ⁿ

Hence:

In capitalization of simple interest, balance grows in arithmetic progression
In capitalization of compound interest, balance grows in geometric progression

Example

Consider a starting balance of BRL 1,000.00 and an interest rate of 50% in the period.

Amortization Systems

The Protheus Financials module - Loans section - uses two amortization systems:

CAS - Constant Amortization System

The installment value of the monthly charge to amortize financing is constant and the interest installment decreasing. Thus, the value of the monthly charge decreases over time.

The CAS system was developed to allow greater monthly amortization of the financed value, simultaneously reducing the interest installment on the debit balance.
In CAS, the amortization and interest installments are periodic, successive and decreasing in arithmetic progression. The installment value is composed by a uniformly decreasing interest installment and by another amortization installment that remains constant.

Price Table

The installment value of monthly charge to amortize financing is increasing and the interest installment decreasing, so the monthly charge is constant during the period contracted.

The financing value in the Price Table has a smaller monthly amortization compared to CAS and, in the duration of the contract, the value of amortization and interest installment increases.
Notably, at the end of the contract, a greater total value of interest is paid in the Price Table than in the CAS system.

Definition

Amortization is a process to pay off debts through periodic payments, made by following a schedule, so each installment corresponds to the sum of the reimbursement of capital or of the interest payment of debit balance, which can be the reimbursement of both, given that the interest is always calculated on the debit balance.

Loan Types

Mutual

Loan operations linked to a contract in which deadlines, rates, values and guarantees (Promissory Notes/Receivables) are set. Meant for companies in need of Working Capital.

Guaranteed Account (C.C.G.)

A type of revolving credit, opened with a limit for a given contract to use or linked to a checking account of credit nature. It guarantees immediate liquidity to customers in order to meet their emergency needs.

Compror

It is a financing credit line meant for the acquisition of inputs or products for inventory.

Vendor

Credit line granted to manufacturers and suppliers of goods, so they can finance their sales to their customers and receive their payments up-front.

Discount

Mode in which the customer advances the resources mentioned in Credit Bill (trade notes, promissory notes and others) future collection, typically from trade operations.

Pledged / Linked Collection

Electronic or regular collection of credit bills (trade notes, promissory notes and others) pledged as security in loan operations (Mutual / CCG). Mainly meant for companies operating in the Middle Market segment.

Financial Investment Types

CDB

A Certificate of Deposit is a time-based deposit made at a bank or savings and loans institution. When you buy a CDB, you agree to leave your money in the bank for a specific time period, from 30 days to several years. In return, the bank guarantees you an interest rate set higher than the one paid in savings accounts. CDB presents daily liquidity, however it is subject to IOF, pursuant to the Federal Revenue Service table. There is also Withheld Income Tax in the redemption, equivalent to 20% of yield.

RDB (Bank Deposit Receipt)

Bill issued by commercial and investment banks, representative of term deposits. RDB can not be transferred and does not present liquidity, which means, redemption is only possible on due date. Incidence of 20% of Withheld Income Tax on yield.

CDI (Interbank Certificate of Deposit)

Bill issued by commercial and investment banks that can only be sold to Financial Institutions. It lacks a minimum expiration date and is not subject to Withheld Income Tax.

Government Bonds

Government Bonds are issued by the National Treasury or by the Central Bank, by state or municipal governments. Features of the bonds issued by the National Treasury or by the Central Bank: short and mid-term; low risk, interest rates lower than those issued by banks and companies.

Bonds from states and municipalities usually present more risks than those issued by the Government. As a consequence, they present higher interest rates. With the stabilization, the government started issuing bills with longer terms paying higher interest than shorter term bills.

Low risk or zero risk is explained by the concept that the Federal Government does not go bankrupt.

Investment Funds

A group of shares, bills and other securities (that belong to the Investment Fund) managed by investment professionals. When buying shares from an investment fund, the money invested is added to other investors' money.

When buying shares from an investment fund, the money invested is added to other investors' money.

Loans

Addition of Loans

When borrowing money, a company must register it in the system through the option below;

Financials Module (SIGAFIN)
- Updates
  - Investments/Loan
    - Investment and Loan (FINA171)
      - Add

The loan and investments addition screen is the same, so you must pay attention to the data relevant to the loan operation, such as:

Model: Indicates that a loan operation is being executed.
Rate: The interest rate charged for the loan. Enter the annual interest rate in effect, because the system performs calculations based on annual rates.
- To better reflect its usability, from release1.23 the title of the field becomes "Rate" instead of "Nominal Rate".
- When you enter the annual rate, make sure the decimal places are accurate, as they may cause different cent amounts in loan installment calculations. Check the accuracy of this information with your bank manager.
Operation: Indicates the type of loan. This type affects calculations made by the system when this loan is paid, in cash flow queries and also in the loan statement report. Configure the options available in the parameters below:

Parameter (SX6)	Description	Default Content
MV_EMPCAL1	Enter whether the loans in this parameter are in a foreign currency and the interest is calculated in the simple interest system.	"EUR"
MV_EMPCAL2	Enter whether the loans in this parameter are in the domestic currency and the interest is calculated in the simple interest system.	"FIN\|COM\|TAN\|ALD\|TIB\|HOT"
MV_EMPCAL3	Enter whether the loans in this parameter are in a domestic currency and the interest is calculated in the compound interest system.	"EMP"
MV_EMPCAL4	Enter whether the loans in this parameter are in a foreign currency and the interest is calculated in the compound interest system.

Currency

In field Currency (EH_MOEDA), define the currency in which the loan was made. Provided the quote is up to date in the Currency Register, the exchange rate is automatically updated for this loan.

Formula

In field Formula, you can set a rule agreed upon with the bank through a specific formula. If you use it, the entered nominal rate is disregarded (EH_TAXA)

Contract Fee

In field Contr Fee (EH_TARIFA) you can enter the contract fee (such as a credit opening rate).

Income Tax

No income tax is levied on financial loans received. The tax is collected from the party loaning the amount, because they profit from the operation and must pay tax on the income earned. Also, the system does not control loans granted, only loans received. Thus, there is no need to enter Income Tax %.

After adding the loan, the value is credited to the bank/branch/account entered on the date set for the operation. You can this credit on the Bank Statement (FINR470) report or in routine Bank Reconciliation (FINA380).

Payment of Loans

After adding the loan, it waits for its postings (payments) which are registered through option:

Financials Module (SIGAFIN)
- Updates
  - Investments/Loan
    - Redemption, Payment and Loans
      - Redeem

Using the loan of the previous step as an example, we will simulate a payment on 10/31/2017, considering compound interest and domestic currency (due to the setting of MV_EMPCAL3 = "EMP", this being the operation selected):

Formula applied to interest calculation:

M = 100,000.00(1+0.50)^30/360

M = 100,000.00 (1.03436608)

M = 103,436.61

J = M – P

J = 100,000.00 – 103,436.61

J = 3,436.61

Loans with Installments and FINAME

You can use the Investments/Loans routine to generate the installments of the loan borrowed, to compare with the contract offered by the bank, as well as handle FINAME contracts signed directly in BNDES or through a bank agent.

When adding a loan, the following fields are available:

Generate Installments (EH_GERPARC): Field to define whether the loan generates installments or not. If you enter "Yes", it activates fields for the generation of installments;
Amortization (EH_AMORTIZ):
- Price: Installment values are constant throughout the financing period;
- SAC: The same amortization value is kept during the financing period, though reducing the interest value paid, which lowers the installment value during the contract;
Term (EH_PRAZO): Quantity of months to pay the loan;
Grace Period (EH_CARENCI): Time of grace period in months;
Interest Installments in Grace Period (EH_JURCAR): Define whether to generate interest installments during the grace period. If set to not generate them, the grace period interest are considered within the validity period of the installments due;
Down Payment Value (EH_ENTRADA): Enter a value defined as down payment for the loan;
Bank Spread (EH_SPREAD): Value of Bank Spread. (Difference between what the bank pays when acquiring resources and what it charges when loaning to a natural person or legal entity);
Bank Spread % (EH_PSPREAD): Percentage calculated on the value financed. If the value is filled out, there is no need to enter the percentage.
Contract Expenses (EH_DESPESA): Allows the customer to enter the values of loan contract expenses;
Spread Date (EH_DSPREAD): Date of Bank Spread transaction. Automatically filled out with the base date;
Amortization/Installment Value (EH_VLAMORP): Set the value to be amortized or paid monthly in accordance with the Amortization type: If Price, it is the installment value. If CAS, it is the amortization value. This optional field is allowed only if field Term is blank;
Consider expenses in calculation base (EH_BASEDES): To take the IOF, rates and expense values into account in the interest calculation base, thus diluting them in the installments;
- Field available from release 12.1.25 onwards;
- When the field at issue is set to "Yes" in the contract, the installment value considers the following fields:

SEH→EH_SALDO + SEH→EH_VALIOF + SEH→EH_TARIFA + SEH→EH_DESPESA + SEH→EH_SPREAD

Notes

If field Term (EH_PRAZO) is filled out, you cannot fill out field Amortization/Installment Value (EH_VLAMORP).
Field term has a validation to check the size of field Installment in the system. If you need a term longer than the size of the field, edit the INSTALLMENT fields group via configurator and make adjustments in accordance with customer needs.
The calculation of installments is performed in accordance with the amortization type (EH_AMORTIZ) selected, either Price or CAS.
- CAS Method: Constant amortization value, in which the value of installments varies.
- Price Method: Constant installment value, in which the value of amortization varies.
If you enter a grace period for the contract (EH_CARENCI), the system checks parameter MV_TPCAREN.
- If the content is set to "1", the calculation takes into account the number of months entered in field Term minus the number of months entered in field Grace Period. Example: Term = 12 months, Grace Period = 3 months. In this case, the system generates 12 installments, the first 3 of which have no amortization in the loan balance.
- If the parameter is set to "2", the calculation takes into account the Term plus the Grace Period as quantity of installments. Example: Term = 12 months, Grace Period = 3 months. In this case, the system generates 15 installments, the first 3 of which have no amortization in the loan balance and the remaining 12 installments compose the loan total.
- In the installments calculation you may, or may not, choose to charge interest during the grace period. Set this in field Interest Installments in Grace Period (EH_JURCAR).
The value of expenses is calculated as follows:
- Value = Bank Spread (EH_SPREAD) + Contract Expenses (EH_DESPESA). If Bank Spread is blank, the system checks the percentage of SPREAD (EH_PSPREAD) and calculates the value on the financed total to add it to field Expenses.
Set the supplier used for generation of provisional installments through parameter MV_FOREMPR; however, you can edit this before saving the installments through option Related Features/Set Supplier.

Recording of Installments

After entering the data to generate the loan, a screen is displayed with the composition of provisional installments to be generated in accounts payable (SE2). The generation of installments follows the numbering of the loan contract, prefix "EMP" and type "PR". The nature of the bill generated is the one entered in the contract and the installments and interest values are saved in fields E2_VALOR and E2_JUROS, respectively.

Important

If you enable interest generation in grace period installments, bills will be generated in accounts payable with the value of BRL 0.01 and interest with the value calculated on the loan debit total.
The value of the bill recorded in accounts payable (E2_VALOR) is composed of amortization of monthly installment plus the interest calculated.

Recording of Costs

Costs not directly related to the borrowing of Loan/Financing are also taken into account, generating a bank transaction (SE5) composed by field expense and by spread value or spread percentage.

Loan Contract Printing

After adding the contract, a report is available to print data on the loan and the provisional installments generated. Find this feature in Related Features -> Print Installments.

Loan Contract Deletion

If you did not execute any financial operation in the contract, you can delete the loan and the provisional installments generated in accounts payable.

Important

Editing a contract does not change the installments already recorded in accounts payable. If you need to make any changes to the installments, delete the contract and add it again. If there are financial operations, reverse the payments.

Loan Payment

Upon redemption, when you select a contract for payment, press "Installments" to display a screen with the installments generated in accounts payable, pertaining the loan selected.

When you select the installment you want to pay, the system loads the installment and interest values on the payment screen to make the financial transaction easier.

After you confirm the payment, the linked bill payable (type "PR") is posted.

Important

You can select only one loan installment for posting;
The system does not let you select an installment if the contract has a previous installment pending.

Payment Reversal

The system allows you to reverse installments already executed and deletes the provisional bills from accounts payable if you select this option. If more than one installment is posted, a screen is displayed with the installment number for you to choose which to reverse.

Parameters

Name:	MV_FOREMPR
Type:	Character
Content Example:	000001
Description:	Supplier for generation of installments of Loan provisional bills.

Name:	MV_TPCAREN
Type:	Character
Content Example:	1
Description:	Grace Period Type: 1 = Grace period within Loan Term. 2 = Grace period outside Loan Term.

Example:

We will simulate the financing of BRL 3,000,000.00 with the following characteristics:

Amortization Table: PRICE
30 installments;
Interest rate of 14% per year;
Grace period in first 6 months;
No interest installments issued in first 6 months, though calculated to be added to starting balance due after the grace period;
IOF and expenses are taken into account for interest calculation base;
Grace period considered outside the loan period (MV_TPCAREN=2); that is, 30 payment installments. Otherwise, they would be 24 (removing 6 grace period installments);

Loan Mathematics

IOF

DECREE No. 6,306, OF DECEMBER 14, 2007. It regulates the Tax on Credit, Exchange and Insurance Operations, or those related to Real Estate Bills or Values - IOF.

This federal tax is levied on credit, currency exchange and insurance contract operations executed by Natural Persons (PF) and/or Legal Entities (PJ). Also included in the taxables list are real estate investments, fixed income assets and some investment funds.

Operation Type	Rate (%)
International purchases with credit, debit or prepaid card	6.38
Purchases with Travelers Cheques	6.38
Exchange	1.1
International Transfers - Title Holder	1.1
International Transfers - Third Parties	0.38
Credit card revolving interest	0.38¹ + 0.0082² per day
Overdraft	0.38¹ + 0.0082² per day
Loans and Financing (supported by PROTHEUS)	0.38¹ + 0.0082² per day
Insurance	from 0.38 to 7.38 - depending on the asset insured
Investments	from 0 to 96 - depending on investment duration
Notes: 1) Regardless of term of operation, IOF is levied on credit operations at the additional rate of 0.38%, whether the borrower is a natural person or legal entity. 2) For natural person borrower: 0.0082% per day. For legal entity borrower: 0.0041% per day.

CALCULATION EXAMPLE (Legal Entity) Imagine a Bank Loan contract with the following parameters:

Type	PJ-Legal Entity
Interest Rate	2.1200%	p.m.
IOF	1.5%	p.a.
Daily Rate	0.0041%	p.d.
Additional Rate	0.38%	per operation
Interest Rate	28.6263%	p.a.
Installment	BRL 2,154.20
Insurance	BRL -
Other rates	BRL -
Period	6	months

Installment	DATE	Consecutive Days	Accrued Days	Monthly Interest Rate	Price System Amortization	Debit Balance	IOF amount
0	08/4/2020					BRL 12,000.00
1	09/3/2020	30	30	2.1200%	BRL 1,896.59	BRL 10,103.41	BRL 9.54
2	10/3/2020	30	60	2.1200%	BRL 1,936.80	BRL 8,166.60	BRL 12.12
3	11/2/2020	30	90	2.1200%	BRL 1,977.86	BRL 6,188.74	BRL 14.81
4	12/2/2020	30	120	2.1200%	BRL 2,019.79	BRL 4,168.95	BRL 17.61
5	01/1/2021	30	150	2.1200%	BRL 2,062.61	BRL 2,106.34	BRL 20.52
6	01/31/2021	30	180	2.1200%	BRL 2,106.34	BRL -	BRL 23.55
	Total	180			BRL 12,000.00		BRL 98.16

In PROTHEUS:

Addition of Loan Record. Among the highlights, notice the field IOF tax %, with the value 0.38.

Generation of installments:

Payment of First Installment. Highlights for IOF calculation method.

In configurator - Branches Register - The registration type determines the reduced IOF percentage rate: PJ 0.0041% - PF 0.0082%

CALCULATION EXAMPLE (Natural Person) Imagine a Bank Loan contract with the following parameters:

Type	PF-Natural Person
Interest Rate	2.1200%	p.m.
IOF	3.0%	p.a.
Daily Rate	0.0082%	p.d.
Additional Rate	0.38%	per operation
Interest Rate	28.6263%	p.a.
Installment	BRL 2,154.20
Insurance	BRL -
Other rates	BRL -
Period	6	months

Installment	DATE	Consecutive Days	Accrued Days	Monthly Interest Rate	Price System Amortization	Debit Balance	IOF amount
0	08/10/2011					BRL 12,000.00
1	09/10/2011	31	31	2.1914%	BRL 1,891.23	BRL 10,108.77	BRL 11.99
2	10/10/2011	30	61	2.1200%	BRL 1,939.89	BRL 8,168.88	BRL 17.07
3	11/10/2011	31	92	2.1914%	BRL 1,975.18	BRL 6,193.70	BRL 22.41
4	12/10/2011	30	122	2.1200%	BRL 2,022.89	BRL 4,170.80	BRL 27.92
5	01/10/2012	31	153	2.1914%	BRL 2,062.80	BRL 2,108.00	BRL 33.72
6	02/10/2012	31	184	2.1914%	BRL 2,108.00	BRL -	BRL 39.82
	TOTALS	184			BRL 12,000.00		BRL 152.93

Calculation of IOF rate and value

As the IOF was calculated in installment 3:Calculated IOF Rate = Additional Rate + (Daily Rate * MIN(365,Accumulated Days)) => 0.38% + (0.0082 * 92) => 0.38% + 0.7544% => 1.1344%IOF Value = Amortization Installment * Calculated IOF Rate = 1,975.18 * (1.1344 / 100) => 1,975.18 * 0.011344 => 22.41

Investments

Addition of Investments

When the company makes a financial investment, it must register it in the system through the option below:

Financials Module (SIGAFIN)
- Updates
  - Investments/Loan
    - Investment and Loan (FINA171)
      - Add

The loan and investments addition screen is the same, so you must pay attention to the data relevant to the investments operation, such as:

Model: Indicates that a financial investment operation is being executed.
Nominal Rate:Interest rate that remunerates the investment.
- To better reflect its usability, from release1.23 the title of the field becomes "Rate" instead of "Nominal Rate".
- If this is a CDB investment, interest is calculated in accordance with compound Interest on investment balance.
- If a CDI investment, the percentage refers to a fixed remuneration (fixed percentage) paid on the CDI variation registered in SM2 (Currency Register).
- That is, for a CDB Investment, interest is calculated directly on the principal. Yet for a CDI investment an indexer is entered in SM2, so the CDI must have a currency code other than 1. For CDB investments, the interest rate must be entered on an annual base.
Operation: Indicates the type of financial investment (CDI, CDB, savings account, etc.). This type affects calculations of investment redemption, in cash flow queries and also in the loan statement report.
- From 07/2020onwards, a new operation was created called FIC → Short Term Investment Funds, with an Income Tax rate rule different from that of the FAF For more information on the Income Tax rate, refer to “Funds Mathematics” in this document.
- The action on the content entered in this field complies with the parameter settings below:

Parameter (SX6)	Description	Default Content
MV_APLCAL1	Indicates the financial investments configured in this parameter are calculated in accordance with the daily CDI variation. CDI is an indexer that corrects the investment in which the bank pays a percentage on the variation of this indexer and is registered in SM2. In the investment register, enter the code of the currency to be the indexer, although all investments are made in BRL. When a customer says the CDB is tied to the CDI, you must add in the system an operation of type CDI, not CDB, because in the system these two investment types have different calculations.	"CDI"
MV_APLCAL2	Indicates the financial investments configured in this parameter are calculated in the daily compound interest system. Enter the rate in an annual base. The system converts the rate and calculates the yield of the period in accordance with the quantity of days invested.	"CDB\|RDB"
MV_APLCAL3	Indicates the financial investments configured in this parameter are calculated in the daily simple interest system. Enter the rate in an annual base. The system converts the rate and calculates the yield of the period in accordance with the quantity of days invested.	"CP "
MV_APLCAL4	Indicates the investments configured in this parameter are calculated in accordance with the Investment Funds by Shares Rule (FAC). There are several in the market. Refer to: Funds Mathematics in this document.	"FAF\|FIC"
MV_APLCAL5	Indicates which investment operations use the calculation of yield by percentage on a certain currency.
MV_10892	Define the months in which Income Tax is withheld from investments by shares in routine Allocation (mandatory withholding of income tax on investments).	05#11
MV_APIRTAB	Define Income Tax rate for months in which the withholding of income tax on investments is not mandatory, .T. -> regressive Income Tax table is considered; .F. -> always 15% (FAF) / 20% (FIC)	.T.

CDI Variation

The calculation of the variation in CDI accrued between periods is executed according to the following formula:

For CDI rates published until 12/31/1997

For CDI rates published up to 12/31/97, the formula of rate DI-CETIP Over is the following:

Example

Percentage for payment: 97,5000

k	DI	TDI (DI/3000)	*TDI (P/100)**	*(1+TDI (P/100)) * k-1 = Factor k**
1	16.62	0.00554000	0.00540150	1.00540150
2	16.63	0.00554333	0.00540475	1.01083544
3	16.74	0.00558000	0.00544050	1.01633489
4	16.70	0.00556667	0.00542750	1.02185105

k-1 = (1+TDI * (p/100) de k -1. Except when k=1, once the multiplier is 1.

For CDI Rates published after 1/1/1998

For the CDI rates published after 1/1/98, the formula must be:

Example
Historic Series - CETIP - Indexes of Segments and Sectors

Percentage for payment: 5000

		A	B	C	D
k	Date	DI % (Average)	TDI (1+(DI/100)^(1/252))-1	*TDI (P/100)**	*(1+TDI (P/100)) * k-1 = Factor k**
1	12/1/2017	7.39	0.00028296	0.00027589	1.00027589
2	12/4/2017	7.39	0.00028296	0.00027589	1.00055185
3	12/5/2017	7.39	0.00028296	0.00027589	1.00082789
4	12/6/2017	7.39	0.00028296	0.00027589	1.00110400
5	12/7/2017	6.89	0.00026444	0.00025783	1.00136211
6	12/8/2017	6.89	0.00026444	0.00025783	1.00162029
7	12/11/2017	6.89	0.00026444	0.00025783	1.00187854
8	12/12/2017	6.89	0.00026444	0.00025783	1.00213685
9	12/13/2017	6.89	0.00026444	0.00025783	1.00239523
10	12/14/2017	6.89	0.00026444	0.00025783	1.00265368
11	12/15/2017	6.89	0.00026444	0.00025783	1.00291219

Column A - CETIP DI Rate - Register it in table SM2 and enter it in field EH_MOEDA in investments of type CDI.
Column B - Formula to find the daily factor (see historic series column) - Line k1 - (1+(7.39/100)^(1/252))-1 Obs.: 252 → business days in accounting year.
Column C - Formula in which you apply the remuneration percentage paid by the institution on CETIP rate, entered in field EH_TAXA (investments of type CDI)
Column D - Formula to compose the compound interest factor - Example: line k1 column D has the interest of one day (1.00027589), line k2 has accumulated of k2 (1.00027589) X k1 (1.00027589) = (1.00055185).
Multiplying factor K (highlighted column) for the investment balance, the updated value is obtained (plus interest).
Subtracting the balance of the updated value, the amount presented is the interest.

See factor k (highlighted column table above) presented on the CETIP website - Fixed Income Calculator - CETIP

Redemption of Investments

After adding the investment, it waits for its postings (redemptions) which are registered through option:

Financials Module (SIGAFIN)
- Updates
  - Investments/Loan
    - Redemption, Payment and Loans
      - Redeem

Using the investment shown in the previous step as an example, we will simulate a redemption on 4/22/2004. The interest is calculated in accordance with the CDI variation, because an investment was used with this characteristic.

Currency Register

For the CDI, you need to define an indexer in the currency register (table SM2), in which you select a specific currency code for this purpose (in the example, currency 5 is used).
When you add CDI investments to the system, you must enter this currency code in field EH_MOEDA for the redemption calculation to be correct and compliant with the financial institution.
You can find daily rates on the Internet, such as on the website of CETIP:

The CDI investment in the example above receives 97.5% remuneration. By using the CDI variation calculation, we find the factor of 1.00113111 calculated on the days 19 and 20/04 (two days), as 21/04 is a holiday (holidays, Saturdays and Sundays are disregarded in the CDI calculation). Multiplying 50,000.00 by the factor 1.00113111, we arrive at the updated value of the investment: 50,056.56.

The IOF is calculated in accordance with the regressive table. Three days of investment are equivalent to an IOF of 90% on the yield (see the table below in Funds Mathematics), in redemptions performed after 30 days no IOF is levied. Income Tax is calculated on Net Yield. So:

56 (Gross Yield)
90 (90% do yield)
66 (Net Yield)
13 (Income Tax – 20% on Net Yield)

(+)Redemption Val = Credit Val + Taxes

Red. Val. on/Princ. = Value of redemption on principal, that is, (+)Redemption Val – Interest

Red. Val. on/Interest = Value of redemption on interest. The interest shown here is calculated on the credit value.

Tip

Through the Fixed Income Calculator - [B3] you can check CDI redemption profitability:

About the Calculator [B3]

The B3 fixed income calculator

A tool to calculate rates and prices of debentures, government bonds, CRA (Agribusiness Receivables Certificates), CRI (Real Estate Receivables Certificates) and DI (Interbank Deposit). It covers approximately two thousand debentures and all government bonds. Moreover, they also offer the option to calculate CRAs and CRIs, with constant updating, performed by a team of specialists.

Redemption of Investment Funds by Shares

Suppose that an investment was added with the share value of contract used in: 1.263745

First register the bank contract in the system, through the path below:

Financials Module (SIGAFIN)
- Updates
  - Registers
    - Bank Contract
      - Add

Enter the contract No., the contract value and the unit value of the shares:

On the path below, register the investment:

Financials Module (SIGAFIN)
- Updates
  - Investments/Loan
    - Investment and Loan (FINA171)
      - Add

Pay attention to the contents of field Contract No., whether its information is being automatically filled out:

From 07/2020 onwards, a new operation was created called FIC → Short Term Investment Funds with an Income Tax rate rule different from that of the FAF operation. For more information on the Income Tax rate, refer to “Funds Mathematics” in this document.

On 3/25/2004, we have executed a redemption (25 days after addition of investment).

The calculations of Yield, Income Tax, IOF are stated in "Funds Mathematics", in this document.

Note: For this situation, the Income Tax rate of 20% was registered directly in the investment. For further details on the Income Tax rate, please check "Funds Mathematics" in this document.

Fund Mathematics

The majority of existing funds present daily liquidity, but IOF is levied on redemptions effected up to the 29th consecutive day as of the date of each investment, according to the table.

As of the 30th day, each investment is exempted from IOF.

To calculate the yield of your fund, you must first know into how many shares the capital invested was transformed, that is, how many shares fit into your capital. The value of this share is published daily in the economy section of the main newspapers, in the website of the bank in which the investment was made, CVM (www.cvm.gov.br), etc. Before anything else, you get the value of the investment – say BRL 10,000.00 – and divide it by the value of the share on the day of the investment – BRL 1.263745 (the value of the shares is usually published with six decimal places), for example. The result is the number of the shares you have. The system uses the share registered in the contract, to make the conversion when you add the investment and then control said investment by shares.

The number of shares in the fund is equal to:

BRL 10,000.00 divided by BRL 1.263745 = 7,912.988775 shares

Once you know the number of shares, just multiply it by the share value on the day the balance of which you want to know. Let us suppose that, after twenty five consecutive days, it has increased in value and reached BRL 1.283459. This gives you the updated value of the investment. This share will be registered in SE0, through option:

Financials Module (SIGAFIN)
- Updates
  - Registers
    - Bank Contract
      - "Update Quote"

Value of an updated investment

7,912.988775 multiplied by BRL 1.283459 = BRL 10,156.00

Gross yield total obtained in the period

Balance in shares of 7,912.988775 multiplied by the share of the last working day of the previous month, or the share on the investment day, 7,912.988775 x 263745 = 10,000.00
Balance in shares of 7,912.988775 multiplied by the share of the day of redemption or allocation minus the balance in item 1. Then, 7,912.988775 x 283459 – 10,000.00 = BRL 156.00 (gross yield)

For yield proportional to redemption:

The redemption value is obtained in shares by dividing the redemption value by the share on the day. For example: 1,000.00 / 283459 = 779.144484, considering the redemption of BRL 1,000.00
We multiply the value in shares obtained in item 1 by the share of the last business day of the previous month or by the share on investment day, 779.144484 x 1,263745 = 984,64
From the redemption value, we subtract the value found in item 2 to obtain the yield value proportional to the 1,000.00. Example: 1,000.00 – 984.64 = 15.36

There is also the possibility of recording entries (SEI→EI_TIPODOC = I6 and I7) relative to monthly allocation (FINA183) by the yield value monthly or accrued since the investment date, following the settings of parameter MV_RNDAPL4.

To better grasp this issue, in partial redemption, we calculate the yield using a simple rule of three. Example:

If 156.00 is the yield on updated 10,000.00, what is the yield on 1,000.00?

X = ( 156.00 x 1,000.00 ) / 10,156.00 = 15.36

Where X = yield on partial redemption.

Observe that, since the calculation was made after twenty five running days and, hence, is NOT exempt from IOF, if there is redemption or allocation, the amount relating to IOF payable must be calculated. By the tax collection table, if there is a redemption on the 25th day after investment, the amount payable as IOF will be equivalent to 16% of the yield (see in the IOF table that 25 days correspond to 16% of IOF on the yield).

IOF value to be paid

16% = 0.16 multiplied by BRL 156.00 = BRL 24.96

IOF collection is only exempt when redemption is effected as of the 30th day of the investment.

Income Tax calculation on gross yield. The administrator of the Investment Fund collects the withheld Income Tax. Collecting always occurs on the last business day of the current month or at redemption, whichever is first. If you do not redeem any amount, on the last business day of the month, the Manager automatically debits your balance in shares, equivalent to the Income Tax value due in the current month. There is a 20% rate on gross yield in the event of a Fixed Income Fund.

Then, on the gross yield amount levies a 20% rate to be collected by the Federal Revenue Service. The IOF due is already deducted from the gross income if the redemption is effected within 30 consecutive days period.

Income Tax Rate

If you fill out the Income Tax rate in field EH_TAXAIRF when registering the investment, the system will always use this rate:

For investments of type FIC→ Short Term Investment Fund
- 22,5% in up to 180 days
- 20% after 180 days
For other investments, the regressive Income Tax table is applied. AR table of SX5:

Income Tax amount to be collected

Without IOF levy (redemption period starting on the 30th day after investment): BRL 156.00 multiplied by 20% = 0.20 equal to BRL 31.20

If there is no redemption till the end of the month, your shares balance on the last business day of the month is reduced to: BRL 31.20 divided by BRL 1.283459 (share of the last business day of the month) = 24.309308 shares.

IOF Levy

If a redemption occurs on the 25th day, IOF of BRL 24.96 is levied, plus IRF:

IRF = (156.00 - 24.96) = BRL 131.04 multiplied by 20% = BRL 26.21

Now, let us calculate your final yield and its after tax profitability. Suppose a redemption occurs on the 25th day after the investment, subject to IOF and Income Tax.

Note: If the calculated IOF is during allocation (Virtual IOF), its value is added to the income of the following month because it was only used not to calculate IR on IOF in the first month and not to calculate a lower income in the following month and, consequently, a lower Income Tax.

Profitability Calculation

Net Yield
= Gross Yield – IOF – Income Tax = BRL 156.00 – BRL 24.96 – BRL 26.21
Net Profitability
= Net Yield divided by Initial Value Invested x 100 = BRL 104.83 / BRL 10,000.00
= 1.05%, in period of 25 consecutive days

In the following month, the investment is calculated using the share of the last business day of the previous month and the share of the allocation date. You must register the value of this share in SE0, both at redemption and at monthly allocation. The system already updates this file with the share value entered at redemption or at allocation.

Booking

The booking of Investments/Loans may occur in the steps below:

Addition of investments or loans (routine FINA171);
Redemption of investments or payment of loans (routine FINA181);
You may also book the aforementioned processes offline. To do so, use routine Offline Booking of module Financials (CTBAFIN);
Monthly, we book interest and taxes using routine "Investments and Loans Allocation" (FINA182) and/or "Investment by Shares Allocation" (FINA183);

Notes

For all default entries of this process, you must obtain values from table SEH fields;
Loan contracts that generated installments, bills of type "PR" (E2_TIPO), can use the supplier ledger account (SA2->A2_CONTA) in configuration of LPs associated to these operations, of postings as well as reversals;
Monthly allocations made through routines FINA182 and FINA183 will be booked in the respective routines, that is, unavailable in offline booking (CTBAFIN), because these processes do not generate bank transactions;
The operations that generate bank transactions, Redemption of Investments or Loan Payments - are booked by routine CTBAFIN;
- We must emphasize that the booking flag of these transactions, in routine CTBAFIN, is controlled through table SE5.
  These transactions may generate values related to the allocation calculation difference, in which case they are booked, LP 582 - Allocation, also by routine CTBAFIN, because they are related to bank transactions.

How to access it?

To access the routines responsible for generating accounting entries in these processes, see below the menu paths of the Financials Module (SIGAFIN);

Updates
- Investments/Loans
  - Investments and Loans (FINA171)
Updates
- Investments/Loans
  - Redemption, Payment and Loans (FINA181)
Miscellaneous
- Accounting
  - Investments and Loans Allocation (FINA182)
Miscellaneous
- Accounting
  - Investment by Shares Allocation (FINA183)
Miscellaneous
- Accounting
  - Offline Booking (CTBAFIN)

Standard Entries

Standard Entry Examples

LP 580 – Addition of Investment/Loan

Account: If(SEH->EH_APLEMP=”APL”, “Investment Account”, “Loan Account”)

LP value: SEH→EH_VALOR

History: If(SEH->EH_APLEMP=”APL”, “Financial Investment”, “Bank Loan”)

LP 581 – Deletion of Investment/Loan

Account: If(SEH->EH_APLEMP=”APL”, “Investment Reversal Account”, “Loan Reversal Account”)

LP value: SEH→EH_VALOR

History: If(SEH->EH_APLEMP=”APL”, “Deletion of Financial Investment”, “Deletion of Bank Loan”)

LP 582 – Monthly booking of Investment interest/taxes and Loan Interest - through Routines FINA182 / FINA183

LP value: If(SEH->EH_APLEMP=”APL” .And. SEH->EH_TIPO $ GetMv(“MV_APLCAL4”),SEH->EH_VALJUR,0)

History: If(SEH->EH_APLEMP=”APL” .And. SEH->EH_TIPO $ GetMv(“MV_APLCAL4”) , “Bank Loan Interest”,"")

LP 584 – Reversal of monthly booking of Taxes of Investments by Shares

LP 585 – Redemption of Investment/Loan

Seq. 01

LP value: SEH→EH_VALJUR

History: If(SEH->EH_APLEMP=”APL”, “Financial Investment Interest”, “Bank Loan Interest”)

Seq. 02

LP value: SEH→EH_VALIOF

History: If(SEH->EH_APLEMP=”APL”, “Financial Investment IOF”, “Bank Loan Interest”)

Seq. 03

LP value: If(SEH->EH_APLEMP=”APL”,EH->EH_VALIRF,0)

History: If(SEH->EH_APLEMP=”APL”, “Income Tax on Financial Investment”, “”)

LP 586 – Reversal of Redemption of Investment/Loan

Seq. 01

LP value: SEH->EH_VALJUR

History: If(SEH->EH_APLEMP=”APL”, “Reversal of Financial Investment Interest”, “Reversal of Bank Loan Interest”)

Seq. 02

LP value: SEH->EH_VALIOF

History: If(SEH->EH_APLEMP=”APL”, “Reversal of Financial Investment IOF”, “Reversal of Bank Loan Interest”)

Seq. 03

LP value: If(SEH->EH_APLEMP=”APL”,EH->EH_VALIRF,0)

History: If(SEH->EH_APLEMP=”APL”, “Reversal of Income Tax on Financial Investment”, “”)

Allocation of Investment by Shares

In investments of Investment Funds per Shares, income tax is withheld by tax authorities. This is why you must run the investment by shares booking routine (FINA183) always in the last business day of the month, so the system can also calculate Income Tax and deduct the calculated value of balance in investment shares. If you do not do this, there will be a difference in the balance of investment shares between the system and the Financial Agent where the investment was made.

Income Tax Rate for Investment by Shares Allocation

The months of mandatory withholding of income tax are set by parameter MV_10892 → 05#11 (May and November)

For the months of May and November, the following rates are used:

15% → FAF → Long Term

20% → FIC → Short Term

Other months follow the rule of parameter MV_APIRTAB:

.T. → See below the regressive Income Tax table:

FIC(Short Term) → 22,5% until 180 days and 20% after 180dias

FAF(Long Term) → Table AR of SX5:

.F. → Always 15% → FAF and always 20% → FIC

Example of Investment by Shares Allocation:

MV_10892 → 05#11 (May and November)

1) On 11/22/2020

Add FAF Investment:

Quantity of Shares: 1,000

Value of Share: BRL 75.00

Investment Total: BRL 75,000.00

2) On 11/30/2020

Allocation by Shares:

Enter Unit Value of Shares = BRL 76.00

Yield = BRL 1,000.00

IOF = 73% = BRL 730.00

IR = ( BRL 1,000.00 - BRL 730.00 ) * 15% = BRL 40.50

Shares to subtract = BRL 40.50 / BRL 76.00 = 0.53289474

Páginas filhas

Investments and Loans - Financials P12

IOF

The B3 fixed income calculator